The premier of Western Australia state, a member of Prime Minister Malcolm Turnbull's Liberal Party, has offered to accept refugees from Australian-funded detention centres amid growing concern about conditions for the 1,350 people held in the camps.
Under Australian law, anyone intercepted trying to reach the country by boat is sent for processing to asylum seeker camps on the tiny Pacific island of Nauru or to Manus Island off Papua New Guinea.
They are never eligible to be resettled in Australia.
Australia and Papua New Guinea said on Wednesday that they would close the Manus Island facility, but gave no timeline, and did not say where the people held there would be sent.
"We would certainly accommodate a number of them in Western Australia and we'd certainly support them as a state government," Western Australian Premier Colin Barnett told the Australian Broadcasting Corp on Wednesday night.
Barnett has taken a similar position in the past, and his stand demonstrated a rare public split in the conservative Liberal Party over the government's controversial detention policy.
A spokeswoman for New Zealand Prime Minister John Key on Thursday said that an offer made in 2013 to accept 150 refugees, which Canberra has rebuffed, still stood.
Reports of abuse
Harsh conditions and reports of rampant abuse at the camps have drawn wide criticism at home and abroad. Australia says its hardline policy is needed to stop deaths at sea during the dangerous boat journey from Indonesia to Australia.
| Assault allegations at Nauru facility
Australian Immigration Minister Peter Dutton on Thursday stood by the government's policy ruling out settling the detainees in a third country, casting doubt over the fate of the remaining 850 refugees on Manus and 500 in Nauru.
"It's never been about tearing down the fences, it's about what to do with the people trapped behind them," said Daniel Webb, director of legal advocacy at the Human Rights Law Center.
"There's absolute clarity about what should happen but no clarity whatsoever about what will happen."
There are no plans to close the Nauru camp, which is under renewed scrutiny after a newspaper published leaked documents detailing reports of more than 2,000 incidents of sexual abuse, assault and attempted self-harm, many involving children.
The Papua New Guinea Supreme Court ruled in April that the detention centre at Manus was illegal and ordered it closed. Next week it will hold a hearing into what progress has been made.