Indonesia's navy swooped on a boatload of 260 Australia-bound asylum seekers at the weekend after Prime Minister Kevin Rudd made an extraordinary personal plea to President Susilo Bambang Yudhoyono.
It is believed Mr Rudd was given top-level intelligence on the whereabouts of the boat by Australian officials in Indonesia.
The boat, which was carrying Sri Lankan men, women and children, would have been the largest to make it to Australian waters since Mr Rudd came to power and would have pushed the Christmas Island detention centre to breaking point.
An Indonesian warship intercepted what Indonesian officials described as a ''cargo ship'' carrying the group on Sunday. Another three Indonesian warships were dispatched to help transport the Sri Lankans back to a port on western Java.
It is believed Mr Rudd called President Yudhoyono on Saturday after Australian Federal Police and intelligence agents learnt the large vessel was to head for Australian waters. After the call, the Australian Defence Force immediately began work with the Indonesian navy to pinpoint the boat in open sea.
It was found off the volcanic island of Krakatoa in the Sunda Strait. The group had set sail from Indonesia on October 6.
Mr Rudd's personal intervention is his first since becoming Prime Minister and is a measure of the growing pressure on the Government caused by the surge in people-smuggling boats.
The arrival of 260 asylum seekers on Christmas Island would have stretched it beyond its ''surge capacity'' of 1200, and likely forced the Government to process asylum seekers on the mainland in contravention of a 2007 election pledge.
There are about 1050 people being held on Christmas Island.
Immigration Minister Chris Evans has already flagged processing boat arrivals at a defence base in Darwin should Christmas Island reach capacity.
A spokesman for Mr Rudd confirmed that the Prime Minister spoke to Dr Yudhoyono on Saturday evening, saying they discussed topics including the earthquake in West Sumatra and people-smuggling. ''They agreed to further co-operation to address people-smuggling,'' he said.
West Australian Premier Colin Barnett yesterday hit out at the Federal Government's decision to grant refugee status to 42 people who were aboard a boat that exploded in April after being deliberately set alight near Ashmore Reef.
The group - 40 males from Afghanistan, one from Pakistan and another from Iran - is expected to be given permanent residency tomorrow. Fourteen will be settled in Victoria.
Mr Barnett said any decision on residency should have been left until an inquest seeking to determine who started the fire is held in January.
''At the time, I made the comment that fuel had been spread on the boat, I was roundly criticised by the Federal Government and others,'' he said. ''That's now proved to be the case. That's a criminal act … people died … it could be seen as murder.''
Senator Evans said that if the coroner were to find against any of the refugees, they could be charged, and anyone found guilty could be deported.
'The Northern Territory police have found that they have no basis on which to charge anyone … so I think the views of the NT police are more important to me than Mr Barnett's uninformed view.''
With YUKO NARUSHIMA