Nauru's justice minister, Russell Kun, has nominated his uncle, Reuben Kun, to act on behalf on asylum seekers who are detained in an Australian-run camp on the island.
This comes after the government barred an Australian legal team from entering Nauru to represent the detainees.
Mr Kun said he saw no need for the lawyers to attend.
The leader of Australia's Democratic Party Senator Andrew Bartlett says Canberra's refusal to step in after the denial of the visas shows its stated aim of improving governance is conditional.
Semator Bartlett says Australia should step in and force Nauru to allow the detainees proper legal representation.
He says the Howard Government has previously applied a lot of pressure on Nauru over money laundering and the sale of fake passports.
"To pressure that on the one hand and then to allow this sort of corruption of the course of justice on the other, because it suits Australia's interests, really sends an appalling message - and apart from that - also is clearly denying justice to asylum seekers."