AU Coalition Nauru plan conflict of interest controversy

Asylum seekers who arrive in Australia by boat can now be processed in Nauru and, if found to be genuine refugees, can be resettled there under an agreement signed by Prime Minister Kevin Rudd and Nauru's president Baron Waqa.

The memorandum of understanding is similar to a deal Mr Rudd struck with Papua New Guinea prime minister Peter O'Neill a fortnight ago.

Mr Rudd says refugees who arrive in Australia will be sent offshore for processing and will be free to "settle and reside in Nauru".

He says the new deal is consistent with Australia's obligations under the refugee convention.

"The memorandum of understanding signed today ensures the unauthorised maritime arrivals transferred to Nauru will receive proper and humane treatment," Mr Rudd said.

He also says he understands Nauru is a small country and the number of people who could be permanently resettled there would be up to the government of Nauru.