Prime Minister Tony Abbott has said "nope, nope, nope" to Australia offering resettlement to any of the thousands of migrants caught up in south-east Asia's refugee crisis.
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"I'm sorry. If you want to start a new life, you come through the front door, not through the back door," Mr Abbott said.
But Indonesian Foreign Ministry spokesman Arrmanatha Nasir said Australia could not ignore the humanitarian crisis.
"My point is this: countries that are parties to the convention on refugees have a responsibility to ensure they believe in what they sign," Mr Nasir said.
Indonesia is not a signatory to the UN convention.
However Indonesia and Malaysia have agreed to provide humanitarian assistance to 7000 Bangladeshi migrants and Rohingya refugees still stranded at sea and provide temporary shelter for up to a year.
On Wednesday, Malaysia and Indonesia said they would temporarily allow thousands of people to come ashore - on the condition that international agencies repatriate them within a year.
At a media conference on Thursday, Mr Abbott said Australia would not be offering resettlement.
"Nope, nope, nope. We have a very clear refugee and humanitarian program," he said.
"It's a refugee and humanitarian program which has been modestly expanded because we have stopped the boats and we are not going to do anything that will encourage people to get on boats."
Mr Abbott said resettling any of the refugees would encourage the people smuggling trade.
"If we do the slightest thing to encourage people to get on the boats, this problem will get worse, not better."
He said Australia was happy to offer assistance to Australia's neighbours in south-east Asia in other ways, including through humanitarian work "inside Burma because part of the problem is the difficulties that some ethnic groups face inside Burma".
But he said there was "no future for anyone in encouraging the people-smuggling trade".
"Australia will do absolutely nothing that gives any encouragement to anyone to think that they can get on a boat, that they can work with people smugglers to start a new life.
"I'm sorry. If you want to start a new life, you come through the front door, not through the back door."
The United States has said it will take refugees as part of international efforts to deal with the crisis.
Opposition Leader Bill Shorten said Labor supported regional resettlement as a general principle.
"But where there is an unfolding humanitarian crisis in south-east Asia, Tony Abbott's 'not my problem' approach is disappointing. There's no doubt there's terrible violence happening in parts which are affecting the Rohingya people."
He called for the government to "engage" on the issue.
'No front door'
Daniel Webb, director of legal advocacy at the Human Rights Law Centre, rejected Mr Abbott's suggestion that refugees fleeing on boats were taking the "back door" into other countries.
"People aren't risking their lives on boats in order to jump some queue. They are risking their lives because they're fleeing danger and no queue exists," he said.
Mr Webb said there were more than 11 million refugees in the world and fewer than 1 per cent were resettled by the United Nations.
"Slashing 6250 places from our refugee intake and spruiking regional deterrence, rather than regional protection, doesn't help," he said.
Mr Webb said Australia should be working with its regional neighbours and the UN to ensure refugees had safe pathways to protection.
Images of emaciated and distressed Rohingya on boats and in camps in recent days have shocked the world.
Even though they have lived in Myanmar for generations, the government refuses them citizenship and other basic rights. Tens of thousands fled their homes in 2012 to escape mob attacks by Buddhists.
In a joint statement on Wednesday, Malaysia and Indonesia said about 7000 people were stranded at sea.
Adrian Edwards, spokesman for the United Nations High Commissioner for Refugees (UNHCR), said earlier that the agency believed about 2000 men, women and children have been stranded on at least five boats near the Myanmar and Bangladesh coasts for more than 40 days in a humanitarian crisis that the Association of South-East Asian Nations appears incapable of addressing.
Other boats have been pushed back out to sea from Indonesia, Malaysia and Thailand following a crackdown on human trafficking while the latest sighting was off the Thai resort island of Phuket, heading south towards Malaysia.
The UNHCR said that in Myanmar several hundred people had abandoned their journeys and returned to the country's western Arakan state, where 140,000 long persecuted Rohingyas live in squalid camps.
Twenty-six international humanitarian aid and advocacy groups said in a joint statement that people in the camps needed acute emergency assistance, with more than 70 per cent of them having no access to safe water or sanitation.
With Lindsay Murdoch
