Relations between the nations were plunged into confusion on Thursday after a bombshell report in The Washington Post detailed that President Trump had called the arrangement the "worst deal ever", called the Saturday phone call "the worst call by far" he had had with a world leader and that the President had hung up on Mr Turnbull after just 25 minutes when the two men spoke.

Adding to the confusion, the US Embassy in Australia issued a statement at 1.15pm on Thursday that said Mr Trump's decision to "honour the refugee agreement has not changed" and that pledge was re-confirmed to the State Department from the White House.

Less than two hours later, Mr Trump threw the future of the deal into doubt and embarrassed the Turnbull government when he tweeted "Do you believe it? The Obama Administration agreed to take thousands of illegal immigrants from Australia. Why? I will study this dumb deal!"

The deal had been made with former president Barack Obama last November for the US to take up to 1250 of around 2500 asylum seekers on Manus Island and Nauru.

Mr Turnbull was forced into damage control by the chaotic messaging from Washington, declaring he was disappointed by the leak, denying the President had hung up on him and insisting the America-Australia refugee deal would go ahead as Mr Trump had committed to honour it, even though he did not like its terms.

"The call ended courteously. It was a 25-minute call, it covered a number of issues but mainly on the refugee resettlement deal," Mr Turnbull said, adding the pair had had a "frank and forthright" conversation in a call that was supposed to have lasted for one hour.

"I'm very disappointed that there has been a leak of purported details of the call in Washington . . . I stand up for Australia's interests. I make Australia's case as powerfully and persuasively as I can, wherever I am."

"What I don't do is indulge in public commentary."

The US-Australia alliance, based on 65 years of history, remained "rock-solid" he said.

Under the terms of the refugee deal, it is possible that the United States could honour the agreement with Australia but not actually take all of the 1250 refugees as they could be rejected during the so-called "extreme" vetting process.

Australian officials said there would be a flurry of high-level conversations overnight as diplomats from the two nations attempted to repair the damage done.

One cabinet minister told Fairfax Media that the reported details of the fiery phone call - which the White House had initially claimed concentrated on the "enduring strength and closeness of the US-Australia relationship" in a bland official statement - were broadly accurate.

"Malcolm has stood up for Australia, he actually had a row with the President of the United States and he hasn't crowed about it, he has since gotten on with the job," the cabinet minister said, speaking on condition of anonymity.

"We are offended but as long as these people [refugees] get off Manus and Nauru, that's the main thing. I'm confident the deal will be honoured, this is part of the process. Trump is trying to get the message out that he hates the deal but can't do anything about it."

Australian government officials were shocked and blind-sided by the tweet Mr Trump put out on Thursday afternoon.

The brutal question they now face is how they are going to manage the relationship when, after Mr Turnbull observed diplomatic courtesy and refused to comment on The Washington Post's report, Mr Trump without warning issued a tweet that humiliates one of the US's closest allies.

Some in Canberra speculated that Steve Bannon, Mr Trump's close and most ideologically fierce adviser, may have leaked the details about the call in order to demonstrate that even if Mr Trump eventually accepts the refugee deal, he is doing so only grudgingly and angrily.

Malcolm Davis, a senior defence analyst at the Australian Strategic Policy Institute, said the US alliance was too important to be rocked by Mr Trump's behaviour and Australia would need to essentially work around the current President if he was going to keep behaving like this.

"For this to happen is unconscionable. I think that probably where we need to take this is [to] rise above it, make sure we don't let this derail a vital relationship because it's too important to let go. But we need to be on our guard because this guy is totally unpredictable … He's completely clueless."

Mr Trump's Press Secretary, Sean Spicer, had said on Wednesday that the President would "honour what had been agreed upon" but that the asylum seekers would be subjected to "extreme vetting".

Opposition Leader Bill Shorten demanded Mr Turnbull "talk straight to the Australian people - tell us what's going on".

The deal - to take asylum seekers currently on Manus Island and Nauru - was struck between Australia and the Obama administration and announced by Mr Turnbull in mid-November.

In the days after the phone call, Mr Turnbull said Mr Trump had agreed to honour the deal, but Washington subsequently sent mixed messages and indicated the President was still considering whether to honour it.

Mr Shorten - who had initially criticised Mr Turnbull for not standing up to the US President - demanded details about the phone call.

Labor wanted the refugee deal to go ahead, Mr Shorten said, "but clearly President Trump and his people are saying one thing happened in this conversation, which is completely at odds with what Prime Minister Turnbull has told the Australian people".

"They both can't be right and I think it's in the interests of the Australian people for Mr Turnbull just to be straight with the people and tell us what's really going on," he said.

"If I was Prime Minister, I would want the United States to be our ally, and I'm sure that the Americans want Australia to be their ally, but if I was Prime Minister I would never just be a satellite of the United States, and it is important that Australia speaks its mind."

US Senate Democrats expressed alarm at Mr Trump's rhetoric and behaviour on Thursday.

A spokesman for Maryland Senator Ben Cardin, a ranking member on the Senate Foreign Relations Committee, said he was "deeply concerned" about Mr Trump's treatment of allies, including Australia.

"The United States continues to face a number of challenges and they can only be solved by working in concert with allies and partners who share our values and goals like Mexico, NATO, and Australia."

with Richard Willingham, Tom McIlroy

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