One of Indonesia's most senior cabinet ministers has denied offering Australia an island to temporarily house refugees and asylum seekers.
The Jakarta Post on Friday reported on its front page that Coordinating Minister for political, legal and security affairs, Luhut Panjaitan, had suggested offering an island as a temporary refugee camp.
The newspaper reported Mr Panjaitan had said Indonesia's "kind offer" would come with strict requirements, ranging from requiring Australia to entirely finance the camp to limiting the period of use of the island.
But Mr Panjaitan told Fairfax Media he had never made the offer of the island and to ignore the newspaper report.
He said he had told The Jakarta Post the Indonesian government didn't want to repeat the experience of a refugee camp on the island of Galang between 1979 and 1996.
The UNHCR ran the camp on Galang, an Indonesian island south of Singapore, for Vietnamese asylum seekers while their claims for refugee status were processed.
Many were subsequently resettled in Australia.
"In my conversation with (The Jakarta Post) I told them about Indonesia's experience with Galang and we don't want to repeat that again. In the end it was us that was dealing with the problems."
Fairfax Media understands The Jakarta Post stands by their report and has a recording of the interview.
Attorney-General George Brandis met Mr Panjaitan in Sydney this week but a spokesman would not say if the island proposal was raised.
Mr Brandis told the Today Show that the pair "discussed and agreed on enhanced intelligence sharing arrangements between Australia and Indonesia".
The office of Immigration Minister Peter Dutton did not respond to requests for comment and Labor's immigration spokesman Richard Marles declined to comment.
The Jakarta Post had reported that the motivation for the offer was that there was potential for conflict between the approximately 13,000 asylum seekers and refugees stranded in Aceh, East Nusa Tenggara and West Nusa Tengarra and local residents living in extreme poverty.
The asylum seekers receive assistance from the International Organisation of Migration. "But the people living nearby are left without financial help. This has created envy that may someday become a problem," the newspaper quoted Mr Panjaitan saying.
Indonesia is not a signatory to the UN convention on refugees, and asylum seekers and refugees who are stranded in the archipelago are not permitted to work or send their children to local schools.
Greens Senator Sarah Hanson-Young said if Australia was willing to resettle people found to be refugees, the proposal "could be a step towards a genuine regional solution".
"We need to establish a fair and efficient system where people's claims are assessed before they're forced to get on a boat in order to reach Australia," she said.
"For this to work, Australia must be willing to take the people who are found to be in need of protection in Indonesia."
Refugee Council of Australia chief executive Paul Power said refugees and asylum seekers need "durable solutions to their predicaments".
"Foisting more people who are in urgent need of permanent safety and protection onto another island, away from scrutiny and accountability is foolhardy at best," he said.
"Australia should be providing the opportunity for people to begin to rebuild their lives instead of perpetuating the problems that already beset Australia's detention system and is harming many thousands of people's lives."
With Karuni Rompies