Late on Monday, Mr Smith struck a deal with the Sri Lankan Government to jointly crack down on people-smugglers exploiting desperate Tamils in the aftermath of Sri Lanka's victory over the Tamil Tiger separatist movement. Australia will also contribute an extra $11million, on top of $38million already committed, to help resettle about 250,000 displaced civilians, mostly Tamil civilians, still being held in camps in the former conflict zone in northern Sri Lanka.

In a joint press conference late on Monday with Sri Lankan Foreign Minister Rohitha Bogollagama, Mr Smith emphasised the importance of apprehending and prosecuting the criminal groups behind the people-smuggling trade.

Mr Smith said, ''Australia and Sri Lanka have in the past cooperated very well over people-smuggling matters, including cooperation at the police, Customs and naval level but I believe we can do even more together.''

Mr Smith and Mr Bogollagama also emphasised the need to deal with the problem at its source.

''Our two countries will actively work for the reconstruction and rehabilitation of Sri Lanka's northern and eastern provinces, to facilitate the return of displaced civilians to their homes in conditions of dignity, peace and freedom,'' the two foreign ministers said after their meeting in Colombo.

''Australia therefore pledges to strongly support the resettlement and reconstruction programs being led by the Sri Lankan Government.''

Mr Smith then flew to Singapore for an APEC foreign ministers meeting yesterday where he also held talks with Indonesian Foreign Minster Dr Marty Natalegawa.

Mr Smith's discussions with his Indonesian counterpart came after the 78 Tamil asylum-seekers on board the Oceanic Viking were promised rapid resettlement in Australia, Canada or New Zealand, but refused to leave the Customs vessel moored off the Indonesian island of Bintan if it meant going back into immigration detention. However, senior Indonesian officials have ruled out allowing the 78 into the community.