Australia had requested Indonesia take the group of about 60 people who were picked up by an Australian vessel south of Java on Thursday but Indonesian officials had so far refused. [break]
"The Indonesian Government has advised Australian officials overnight that they are reviewing the request put forward by Australia," Immigration Minister Scott Morrison said in a statement.
"While we welcome Indonesia´s review of our request, in the best interests of the safety of the passengers and crew of the rescued vessel and the Australian vessel that has been rendering assistance, earlier this morning I requested Lieutenant General Campbell to transfer the persons rescued from the SAR (Search and Rescue) incident to Christmas Island."
Morrison said they would then be rapidly transferred to camps on Papua New Guinea´s Manus Island or the tiny Pacific nation of Nauru, in line with Australia´s hardline policy on asylum-seekers arriving by boat.
"They will not be resettled in Australia," he said.
Australia´s new Prime Minister Tony Abbott has vowed to turn asylum-seeker boats back to Indonesia -- from where many embark on the dangerous journey -- when it is safe to do so.
Morrison said that Indonesia had also previously accepted two boatloads of asylum-seekers who were transferred at sea to Indonesian vessels.
But Jakarta has received the policy coolly, and on Friday an official angrily rejected the idea of asylum seekers being returned to Java.
"The Indonesian government NEVER AGREED to such wishes or policies of Australia," Djoko Suyanto, co-ordinating minister for political, legal and security affairs told AFP in a text message.
"This has been conveyed since the time of (former Australian prime minister) Kevin Rudd, and there is NO CHANGE of policy regarding asylum seekers wanting to go to Australia under the current Abbott government.
"Australia already has its own ´detention centres´ in Nauru and PNG. That´s where the asylum seekers should be sent, NOT TO Indonesia."
The row over the would-be-refugees comes as tensions between the two countries have been under pressure over a spying controversy following a report that Australian missions across Asia, including the one in Jakarta, were involved in a US-led spying network.
The allegations of espionage prompted Indonesia to summon the Australian ambassador, while Foreign Minister Marty Natalegawa declared "enough is enough".
Related story
Preparations Underway for Dragon Boat Race in Pokhara
