The Australian government said the fate of the group, intercepted by a navy ship this week, was being discussed with both Jakarta and the tiny Pacific nation of Nauru, where Australia already has a immigration detention centre.
But Canberra played down a report in the Sydney Morning Herald that it was seeking to have the group sent back to Sri Lanka via Indonesia, in a possible breach of international conventions.
"While the government is considering options, clearly no action would be taken which would breach our international obligations," Immigration Minister Kevin Andrews and Foreign Minister Alexander Downer said in a joint statement.
"Any suggestion that Australia would agree to an arrangement which would see refugees returned to a country where they face persecution is wrong.
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Australia has a strict policy of detention for asylum-seekers and the ministers said the group, all men, would not be taken to the Australian mainland.
Instead, it said the men would be temporarily h