IMMIGRATION Minister Chris Bowen has admitted the high court judgment to continue an injunction against the Gillard government's plan to send asylum seekers to Malaysia is a significant blow for the Government's plans to undermine the people smuggling model.

Mr Bowen has spoken of his disappointment with the ruling, which has effectively made an injunction on plans to send asylum seekers to Malaysia permanent.

``Let's make no bones about it. This is…disappointing,'' he said.

Mr Bowen said the Government had commissioned ``urgent'' legal advice for the ramifications of the judgment for offshore processing more generally.

He said the cabinet would ``carefully'' consider options.

When asked if the Government would consider the opposition's suggestion of using Nauru as an offshore processing location - if it is still legal - Mr Bowen said he couldn't rule anything in or out.

He described the decision as a significant blow for the Government's plans to undermine the people smuggling model.

When asked how the Government got its legal advice so significantly wrong on the matter, Mr Bowen said the High Court had applied a “new test”, which had not been understood before.

In a major upset for the Government, the full bench of the high court has this afternoon found the plan to be legally flawed.

“Today the High Court held invalid the Minister for Immigration and Citizenship's declaration of Malaysia as a country to which asylum seekers who entered Australia at Christmas Island can be taken for processing of their asylum claims,” a statement said.

“After an expedited hearing before the Full Bench, the Court by majority made permanent the injunctions that had been granted earlier and restrained the Minister from taking to Malaysia two asylum seekers who arrived at Christmas Island, as part of a larger group, less than four weeks ago.”

The plan has been stalled since August 7, when human rights lawyer David Manne took the matter to the nation’s top court.

Lawyers for asylum seekers caught up in the plan have argued that the deal is not lawful because Malaysia is not a signatory to the UN refugee convention and will not provide enough human rights protections.

Under the plan, the Gillard Government wanted to send 800 asylum seekers to Malaysia in exchange for 4000 genuine refugees.

The Government has always claimed to be on strong legal grounds with the plan.

However, Chief Justice Robert French said today: "The declaration made... was made without power and is invalid."

Legal Professor Don Rothwell said that by implication, Minister Chris Bowen needed to demonstrate a country was an appropriate country for which asylum seekers could be sent for offshore processing.

There can be no appeals to the High Court on this decision, however the Government may seek to amend the legislation in the parliament in order to get its plan through.

"It is always a legitimate tactic open to a Government when it loses a case like this to review the legislation,'' Prof Rothwell.

He said Minister could seek to "revive'' the Malaysia solution by issuing a valid declaration in accordance with the terms the court has identified.

He said that at face value, that could include Malaysia becoming a signatory to the UN refugees convention, or Australia and Malaysia entering into a legally binding agreement as to the treatment of asylum seekers.

"It indicates that any attempt by the Government at this point in time to make arrangements for offshore processing are significantly constrained,'' Prof Rothwell said.

Opposition Immigration Minister Scott Morrison said the judgment marked a major policy bungle.

“On Julia Gillard’s year of delivery, this minister has failed to deliver,” he said.

“(The deal’s) construction was always pretty shoddy.”

Mr Morrison said he’d been to Malaysia and it was plain that the protections claimed did not exist.

He said the Opposition still favoured the plan of re-opening Nauru for offshore processing.

Originally published as Court scuttles Gillard's Malaysia deal