The controversial security company Paladin will continue to provide services at refugee camps on Manus Island until the end of the year.
Papua New Guinea's prime minister James Marape has called for Paladin's contract to be terminated as he says foreign companies should not be doing work that local firms can do.
But SBS News reported Paladin's contract has been extended by the Australian government until 31 December.
The Australian Financial Review reported the six-month extension could be worth about $US70 million.
Australia's Auditor General is reviewing the procurement process through which Paladin won its initial $US300 million contract.