The Manus Island detention centre is a "problem" that has done more damage to Papua New Guinea's reputation than any other factor, the nation's Prime Minister Peter O'Neill says, saying the facility must eventually close.

Speaking at the National Press Club in Canberra on Thursday, Mr O'Neill also said his government could not afford to resettle those found to be genuine refugees, fuelling concern that vulnerable men on the island will continue to languish with an uncertain future.

PNG Prime Minister Peter O'Neill says the Manus Island detention centre needs to be closed down. Credit:Nick Moir

The Turnbull government is responsible for meeting the costs of detention and resettlement at the Manus Island facility, which houses single men.

As Fairfax Media reported last month, more than 60 refugees live in limbo at the Manus Island transit centre at Lorengau, while more than 900 are in their third year at the detention centre. More than half of those in detention have been found to be refugees.