Prime Minister Julia Gillard has struck a deal that will see New Zealand resettle 150 refugees from Australia's system each year.

Ms Gillard and her New Zealand counterpart announced the deal after holding leaders talks in Queenstown.

Ms Gillard says the deal could affect asylum seekers currently being held in processing centres on Manus Island and Nauru.

"The aim here is to have it start in 2014 and be ongoing," she said.

"The 150 could be drawn from people who are in Australia now and we would want to work with PNG and Nauru so it is possible that some of the 150 could come from who are processed on PNG and Nauru."

Mr Key says New Zealand will not increase its overall intake of asylum seekers from its present level of 750 a year, but that number will now include those from Australia.

"Australia is grappling with the huge challenge of illegal arrivals by sea and is at the forefront of the efforts to disrupt people smuggling across the region," Mr Key said.

"As part of our support for a regional approach, New Zealand will resettle 150 genuine refugees annually from the Australian system ... as part of the 750 refugees that we annually take.

"So it's not an increase in the number of refugees New Zealand takes but a different sourcing of the location of those refugees."

He says taking refugees from Australia makes sense and will not encourage asylum seekers to get on boats bound for New Zealand.

Mr Key has previously said he believes it is inevitable that New Zealand will be facing similar policy quandaries to Australia.

"It's my view a boat will turn up in New Zealand, I think it's a matter of time," he said earlier this week.

'Bandaid solution'

Sorry, this video has expired NZ refugee deal 'accommodating the boats' ( ABC News )

But Opposition immigration spokesman Scott Morrison is not convinced.

"What this arrangement has the risk of doing is putting a bit of Kiwi sugar on the table for people smugglers," he said.

"What we should have been talking about is how New Zealand and Australia can be working together, through the Bali process, to beef up natural deterrents."

He says the talks should have focused on things like improved training of immigration and customs officers, better border protection technology and regional border patrols.

"These sorts of issues is what the agenda needs to be within our region, to stop boats not just coming to Australia, but to stop the secondary movement of people out of countries far away from our region and transiting through our region," he said.

"This is where the Prime Minister, I think, has once again let the Australian people down on our borders because she is always looking for a way to cover her mess rather than fix her mess."

Greens Senator Sarah Hanson Young also says the decision to relocate some asylum seekers to New Zealand is flawed.

"This just shows what a failure Manus Island and Nauru has been," she said.

"It is an attempt to bandaid over what a mistake this was.

"It's not going to save lives. In fact it's going to put more lives at risk.

"More people will be taking dangerous boat journeys as a result of less people being re-settled directly."

Ms Gillard and Mr Key also foreshadowed tougher measures to bring down mobile roaming charges for Australians and New Zealanders travelling across the Tasman if phone companies do not act first.

Ms Gillard says they will co-operate in seeking annual reporting and more transparency in the sector.

"Ultimately if we don't see reductions in these kind of charges we will empower our competition regulators to act and to intervene in the market to get people a better deal," she said.