In a late night tweet an angry Donald Trump posted: "Do you believe it? The Obama Administration agreed to take thousands of illegal immigrants from Australia. Why? I will study this dumb deal."
His tweet contradicted the US Embassy in Australia, which only a few hours earlier said President Trump would honour the deal to process approximately 1,200 refugees from Manus Island and Nauru.
Malcolm Turnbull told Radio 2GB the deal is still on.
"He committed to stick to the deal that President Obama has done so it's a very important deal for them. And it's one that we have secured with the Obama administration and I have made the case as powerfully and persuasively as I can to maintain it with the Trump administration."
The refugee agreement was struck under the Obama Adminsitration and it's still unclear whether refugees sent to the US will be accepted or rejected under so-called 'extreme vetting' measures.
The Washington Post's White House bureau chief Philip Rucker reported a weekend call between President Trump and Prime Minister Turnbull secured the agreement but it wasn't friendly.
"President Trump felt like this would be a danger to national security in the US and actually told the Prime Minister that he doesn't want to let in the next Boston bomber, that's a reference to the bombings a few years ago at the Boston marathon. So, a very hostile call, it ended abruptly after about 25 minutes and a real indication of souring relations."
Malcolm Turnbull didn't elaborate on the call when he was asked by reporters about it in Melbourne today, saying the relationship between the two countries remains strong.
"I can assure you the relationship is very strong, the fact that we received the assurance that we did, the fact that it was confirmed, the very extensive engagement we have with the new administration underlines the closeness of the alliance but as Australians know me very well, I stand up for Australia in every forum, public or private."
Philip Rucker from the Washington Post says senior US officials told him President Trump didn't hold back when he spoke to the Mr Turnbull.
"Trump actually told the Prime Minister he had spoken with four other world leaders that day, this was Saturday remember, including Russia's President Vladimir Putin, but he told your PM this was the worst call by far."
President Trump built his election campaign on strong criticisms of immigrants and refugees.
Since taking office, he's signed an order to temporarily ban citizens from seven majority Muslim nations from entering the US.
