Australian prime minister Kevin Rudd, has announced a new refugee plan with Nauru that echoes the deal struck with Papua New Guinea two weeks ago.
Asylum seekers who are sent to Nauru for processing will now be able to settle there if they are found to be refugees.
Both agreements will deny refugees the chance to be resettled in Australia.
Mr Rudd says Nauru will get an extra A$17 million in aid to expand its prison capacity.
The announcement comes just a fortnight after asylum seekers being held on Nauru rioted, causing extensive damage to the facility there and a day after it was revealed that the government's policy of sending boat people to Papua New Guinea would cost $1.1 billion.