THE third asylum seeker boat to arrive since the Malaysian people swap deal was signed two weeks ago has plunged the Government into troubled waters.
Another 102 asylum seekers landed at Christmas Island last night, including more children.
This takes the number of people facing deportation to 207, more than a quarter of the 800 Malaysia will take.
The arrivals coincided with the confirmation of another immigration deal - this time with Papua New Guinea - at further cost to taxpayers.
The boat surge increases pressure on the Government, which is facing a High Court challenge to its people swap deal that will be heard on August 22.
Prime Minister Julia Gillard said the Government was very confident it could send asylum seekers to other countries.
But Immigration Minister Chris Bowen warned that delays would provide people smugglers an angle to "spin" to desperate people willing to get on boats.
Opposition immigration spokesman Scott Morrison said about 770 asylum seekers had braved seas to reach Australia since the Government announced its new policy in May.
He said the deal's "use-by date" was fast approaching, regardless of the High Court challenge.
"It's a one-off deal with one country with a clear use-by date and a huge cost of almost $300 million, which simply hasn't been thought through," he said.
With the deal hanging in the balance, another option for processing asylum seekers has emerged, with the Papua New Guinean Government agreeing to re-open the Manus Island detention centre.
Ms Gillard confirmed the agreement in a statement.
"Arrangements are being made for a high-level delegation of Australian officials to travel to Papua New Guinea in the very near future to finalise a memorandum of understanding regarding the centre," Ms Gillard said.
"We are committed to working in partnership with PNG to examine how such a centre might operate, including how it might best complement broader regional activities."
PNG Prime Minister Peter O'Neill said Australia would meet the running costs of the centre, although details were yet to be confirmed. If the centre were renovated and run by Australian staff, it would cost millions.
As the Malaysian deal legal battle looms, the Government continues to say asylum seekers arriving at Christmas Island will be sent to Malaysia.
Home Affairs Minister Brendan O'Connor said people on the latest boat "will be taken to Christmas Island for pre-transfer assessments, pending removal to Malaysia".
As the asylum seekers entered legal limbo, Burmese refugees from Malaysia have arrived in Melbourne to start a new life.
The first eight to be re-settled in Melbourne are not part of the 4000 refugees Australia has agreed to take under the Malaysian deal.
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