Immigration Minister Peter Dutton said there was room on Nauru to take additional detainees, which comes after PNG officials announced processing centre on Manus Island will be closed.
“There is capacity (on Nauru) but we’re talking with the PNG government about what options are available in PNG and we’ll continue those discussions with them," he told Sky News on Thursday
He confirmed the asylum seekers won't be allowed in Australia.
"The men off Manus Island will not be settling permanently in Australia and we will work with the Papua New Guinea government to help them return home or back to third countries," he said
Turnbull talks tough on boat arrivals
A tough-talking Malcolm Turnbull has warned Australians cannot be misty-eyed about asylum-seeker boat arrivals.
The prime minister vowed none of the asylum seekers being held at the Manus Island detention centre, soon to be closed by the Papua New Guinea government, will ever make their way to Australia.
"We cannot be misty-eyed about this. We have to be very clear and determined in our national purpose," he told reporters in Hobart on Thursday.
Mr Turnbull said he looked forward to discussions with the PNG government on what to do with the hundreds of asylum seekers who are in limbo due to the centre's impending closure.
"We cannot be misty-eyed about this. We have to be very clear and determined in our national purpose."
But he is adamant allowing them to be resettled in Australia would encourage people smugglers and drownings at sea.
"We must have secure borders and we do and we will, and they will remain so, as long as I am the prime minister of this country," Mr Turnbull said.
Labor, which created the latest offshore processing regime in 2013, accused Mr Dutton of setting a new benchmark in incompetence.
Opposition Leader Bill Shorten said the government had been ignoring a "trainwreck" for months.
"It's a shambles," he told reporters in Hobart.
The Greens say the saga is about fear-mongering and winning votes before an election.
"Malcolm Turnbull should be better than this," immigration spokeswoman Sarah Hanson-Young told reporters in Canberra.
Australian National University professor of international law Don Rothwell says there's no legal reason why they can't be taken to Christmas Island, which currently houses 183 people and has an “operational capacity” of about 1094
PNG's Prime Minister Peter O'Neill has announced the regional processing centre on Manus Island will be closed following a ruling from the country's Supreme Court that the centre was illegal.
Mr Dutton admitted the government had been planning for the closure since late last year.
"All of our agencies have been contemplating for a long period of time, through the national security committee of cabinet, how we approach these different scenarios."
He said there was capacity to move the men to Nauru but talks were continuing with the PNG government.
"Potentially there is some time for this to be dealt with and we'll deal with it in a measure and reasonable way.
PNG High Commissioner to Australia Charles Lepani says discussions will start next week on working out a plan to close the centre.
Ultimately the decision about what to do was for Australia - PNG's job was only to process the asylum seekers.
"It's not for us to decide or urge Australia to take them on," he told ABC radio.
"We cannot force them to settle (in PNG)."
Refugee lawyer David Manne says the implications of the court decision were "very, very serious", not only in a legal but financial and human sense.
He said it was clear the government had no idea what to do.
"The fundamental fact here is that the government does not have any clear road plan, as it has confessed itself," he told ABC TV.
