³ÉÈË¿ìÊÖ

The Australian PM Julia Gillard has said she will pursue a deal with Malaysia on handling asylum seekers despite a rare parliamentary rejection.

On Thursday, the Australian House of Representatives passed a motion condemning the proposed arrangement.

Australia wants to send 800 asylum seekers to Malaysia, taking 4,000 confirmed refugees in return.

Malaysia is not a signatory to the United Nations conventions on treatment of refugees.

Ms Gillard's aim is to deter asylum seekers from coming to Australia by boat.

"I intend pursuing the discussions of the Malaysia agreement to finality and then I intend to implement it because I intend to break the business model of the people smugglers," Ms Gillard told parliament.

Immigration Minister Chris Bowen has said he is on "very strong legal ground" with the plan.

The policy has already been condemned by the United Nations Human Rights Commissioner and refugee advocates.

The ³ÉÈË¿ìÊÖ's Sydney correspondent Nick Bryant said the parliamentary rebuke was embarrassing.

Ms Gillard stands at the head of a minority government, and a Greens MP and an Independent MP who normally support her joined with the conservative opposition to denounce the policy.

The government claims the Malaysian Solution, as it has been dubbed, would act as a strong deterrent for boat people heading for Australian shores and break the business model of people smugglers operating out of Indonesia.

But the Greens have opposed the policy because they believe it is inhumane, while the conservative opposition would prefer a return to what was known as the Pacific Solution.

That was a controversial policy brought in by the government of former PM John Howard whereby boat people were sent to detention centres on remote Pacific islands.

Meanwhile, a challenge has been lodged in the High Court over two of 274 refugees in limbo on Christmas Island.

The refugee lawyer David Manne says his Malaysian challenge was based on the grounds it would separate a Kurdish man, who has been granted refugee status in Australia, from his newly-arrived wife and four-year-old son.

But Mr Bowen said there were "several provisions" of the Migration Act which allowed for the arrangement with Malaysia to be entered into.

"We are on very strong legal grounds indeed," Mr Bowen told ABC Radio.

"Blanket exemptions would be unworkable and counterproductive and would provide for a loophole for people-smugglers to exploit and encourage people to get on boats and make a very dangerous journey."

"In relation to vulnerable cases, we would take into account personal circumstances and that would be a range of personal circumstances which would go into that consideration," Mr Bowen said.

The Australian newspaper reported that negotiations with Malaysia are currently stuck on Australia's insistence that asylum-seekers sent to Malaysia be given identity papers to ensure they are not harassed by police.

It said that Australia wants Kuala Lumpur give an explicit commitment not to send refugees back to the country they fled.

Talks on the proposed deal are continuing.