Papua New Guinea's Prime Minister Peter O'Neill says the Manus Island regional processing centre will be closed following a ruling from the country's Supreme Court.

Key points: The PNG Supreme Court found the centre was unconstitutional

The PNG Supreme Court found the centre was unconstitutional O'Neill says PNG will suffer economically as a result, but will work with Australia to ease transition

O'Neill says PNG will suffer economically as a result, but will work with Australia to ease transition The timing of the closure is up for negotiation between the two countries

PNG's Supreme Court ruled on Tuesday Australia's detention of asylum seekers on Manus Island was illegal.

Mr O'Neill has released a statement which said his government would "immediately ask the Australian Government to make alternative arrangements for the asylum seekers".

"For those that have been deemed to be legitimate refugees, we invite them to live in Papua New Guinea only if they want to be a part of our society and make a contribution to our community," he said.

"It is clear that several of these refugees do not want to settle in Papua New Guinea and that is their decision."

Mr O'Neill has also stated that the local economy would suffer as a result and the Government would work with the Australian Government to ease the transition.

Manus Island Governor Ronnie Knight, who represents the region where the Manus Island Regional Processing Centre is located, said he expected the centre would close by tomorrow.

Immigration Minister Peter Dutton said the Government would "continue discussions with the PNG Government to resolve these matters".

"We will work with our PNG partners to address the issues raised by the Supreme Court of PNG," Mr Dutton said in a statement.

"The Government has not resiled from its position that people who have attempted to come illegally by boat to Australia and who are now in the Manus facility will not be settled in Australia."

Mr Dutton held a media event in Melbourne earlier this afternoon, where he did not raise the possibility of closure.

About 850 men remain at the Manus Island detention centre — around half of whom have been found to be refugees — and numerous Australian ministers have stated that the remaining men will not be brought to Australia.

No timeframe for the closure was outlined by Mr O'Neill, who said the timing would be the focus of negotiations with Australia.

Iranian refugee Riaz Samadi said they should be brought to Australia.

"We came from Australia, we belong to Australia, we do not belong to PNG, we do not belong to other country," Samadi said.

Dutton should be in PNG: Marles

Labor's immigration spokesman Richard Marles told the ABC Labor remained committed to offshore processing.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 6 minutes 59 seconds 6 m Manus Island detention centre to be closed down

Mr Marles said Mr Dutton should be in PNG for discussions.

"Were it me at this moment, I'd be in PNG right now," he said.

"I'd be trying to work out how offshore processing can be maintained … Any other option is incredibly difficult."

Mr Marles also refused to rule in or out any options for a potential Labor government, including the option of resettling on Christmas Island.

Shadow attorney-general Mark Dreyfus, who was attorney-general at the time of the agreement's signing, refused to comment to the ABC on what advice he was given at the time.

He stressed numerous Labor politicians had stated Manus Island was never meant to be a permanent solution.

'Beginning of the end' of Government's asylum plan

Mr Knight said he did not believe negotiations could lead to keeping the detention centre open.

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"I don't see where that can actually happen unless there's a major drastic improvement in the way they are treated and if these people are kept more as guests than as inmates," he said.

Human Rights Watch executive director Kenneth Roth told ABC's Lateline the closure of the Manus Island facility was the "beginning of the end" of Australia's policy on asylum seekers.

"Australian policy has basically been to make life so miserable for the asylum seekers in Manus and Nauru that they ultimately just go back home," he said.

"Ostensibly there is a right to asylum, ostensibly they can seek refuge in these islands."

Christmas Island was preparing to accommodate extra people

Mr Dutton has already been in direct talks with Papua New Guinea's Minister for Foreign Affairs and Immigration, Rimbink Pato, after the country's Supreme Court ruled detention of asylum seekers was illegal.

On Tuesday he said that the current immigration arrangements remained in place.

"The court decision is binding of course on the Papua New Guinea Government but not on the Australian Government," he said.

Late last year, Mr Dutton said that preparations were underway to accommodate more asylum seekers at Christmas Island, though that was contingent on a court case that the Government eventually won.

He told Sky News at the time that the Department of Immigration and Border Protection had been planning in case of a loss.

"It's prudent for my department ... to put in place contingency arrangements," he said.

"If we needed to accommodate more people on Christmas Island, there is some prep work that is taking place there now."

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