The Papua New Guinea government has announced it will close the Manus Island detention centre.

Papua New Guinea Prime Minister Peter O'Neill said in a statement on Wednesday the centre would close following a decision by the PNG Supreme Court that found the centre to be unconstitutional.

"Respecting this ruling, Papua New Guinea will immediately ask the Australian government to make alternative arrangements for the asylum seekers currently held at the regional processing centre," Mr O'Neill said.

Mr O'Neill said his government had never expected the asylum seekers to be kept for so long on Manus Island.

"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 part of our society and make a contribution to our community," he said.

The closure would be carefully managed in conjunction with local businesses and the Australian government.

The negotiations with Australia would focus on a timeframe for closing the facility and managing the resettlement of people at the centre.

The PNG leader said he was proud that his country had been able to stop the loss of life due to people-smuggling.