They must be clothed, fed and housed in a stable and secure environment

PNG Prime Minister Sir Mekere Morauta

The government said it would process asylum claims of the 187 mainly Iraqi refugees picked up off the northwest coast of Australia on Sunday.

Australia will build a processing centre for the boat people where claims for political asylum can be handled by international immigration authorities.

The arrangement follows Australia's US $10m deal with the tiny Pacific island of Nauru, where hundreds of mainly Afghan migrants are now being processed.

Temporary deal

Papua New Guinea Prime Minister Sir Mekere Morauta said in a statement his country would only accept the refugees on a temporary basis.

Conditions are better for those who have been taken to New Zealand

"They must be clothed, fed and housed in a stable and secure environment," he said in the statement.

"The processing centre would be handed over, free of charge, to the government of Papua New Guinea once it had fulfilled its purpose," he said.

Australian Prime Minister John Howard said the boat people were taken aboard a navy frigate after they sabotaged and sank the vessel carrying them from Indonesia.

He said the warship had forced the vessel to stop by firing shots across its bows, but several people had thrown themselves and their children into the sea.

The navy rescued everyone.

Australian fury

But Mr Howard reacted in fury, saying "I certainly don't want people of that type in Australia."

The Papua New Guinea announcement did not say when the boat people would be landed by the navy or where the processing centre would be built.

I certainly don't want people of that type in Australia

Australian Prime Minister John Howard

Australia has refused entry to all boat people trying to get into the country illegally since last August, but the navy has picked up nearly 1,000, most of whom have been sent to Nauru.

United Nations officials are processing their claims for asylum on the island, but have said they will not deal with any further arrivals.

Australia is continuing to land asylum seekers on Nauru despite concerns that an agreement intended to prevent refugees being forced ashore has been broken.

Almost 150 Afghans have been sent on from Nauru to New Zealand.

The Australian government's hard line against asylum seekers has significantly boosted Mr Howard's popularity, just four weeks from a general election.