Reports in the Australian media say Canberra is adopting a more aggressive stance in dealing with its Pacific neighbours.
The Foreign Minister, Alexander Downer, has warned that Australia has to learn "not just to shovel aid" into Pacific countries that failed to adopt strict controls.
The Australian newspaper says the move signals a new phase in Canberra's attempts to drive reform across the Pacific.
The diplomatic breakdown threatens to spill over when Prime Minister John Howard attends the Pacific Islands Forum in Fiji next week.
