Peter Dutton has said the Morrison government is not able to pursue the resettlement of asylum seekers in New Zealand because intelligence suggests people smugglers would resume operations.

Dutton declared on Sky News that Labor had raised New Zealand as an option to speed up the removal of people from Nauru, but the idea was in fact raised by the prime minister, Scott Morrison, before the Wentworth byelection.

Morrison told government backbenchers concerned about deteriorating conditions on Nauru, and also telegraphed in the parliament, that New Zealand could be an option if the government could secure the passage of legislation intended to ensure there could be no backdoor entry to Australia.

However, the home affairs minister said on Thursday “now is the wrong time to be sending people to New Zealand” because intelligence surveillance of smuggling operations had detected “increased chatter” and “talk about elections and change of government here”.

“My judgment at the moment, based on all of the advice available to me, is New Zealand would be a pull factor at this point in time,” Dutton said.

He said the government could pass the legislation Morrison flagged but even if it did, there would need to be a subsequent assessment of intelligence to ensure transfers didn’t trigger fresh boat arrivals – a caveat Morrison has not alluded to.

Dutton confirmed there had been an acceleration of removals from Nauru in recent weeks, but he claimed that was designed to save money, not to respond to humanitarian concerns about the health of children.

He said people being removed from Nauru would not return to offshore detention but insisted they would not be settled in Australia either.

Amnesty International Australia said the decision to move people off Nauru was an admission of failure regarding the offshore processing system,

Human rights and welfare groups said the “welcome” revelation demonstrated politicians were catching up with community sentiment, but that the timeline was still too long for the 38 children on the island, and the remaining adults also needed to be evacuated.

They have also questioned the motives of the government continuing its legal challenges against medical transfers while telling the Australian public it was working to bring children to Australia.

“We’re encouraged that politicians are starting to listen to what Australians want, because the fact is when one child is suffering all of us suffer,” Claire O’Rourke, a spokeswoman for Amnesty International Australia, said.

“Today’s news is actually an admission that [the policy of] Manus and Nauru is a failure.”

The Human Rights Law Centre said it was a “dark chapter” in Australia’s history that wouldn’t end until all asylum seekers and refugees were off Manus and Nauru.

“It shouldn’t have taken five years, but it’s welcome news that the government is finally conceding that these kids must be evacuated to Australia,” said the centre’s director of legal advocacy, Daniel Webb.

In the past 16 days alone, 135 people have been transferred to Australia.

“While any measures to move all children from ‘offshore processing’ in Nauru are welcome, these steps should be taking place immediately,” Catherine Stubberfield, a spokeswoman for the UNHCR, said.

Stubberfield told Guardian Australia the government had the ability and responsibility to evacuate everyone from both offshore facilities “within days”.

The Asylum Seeker Resource Centre said it was case managing 15 children still on Nauru and they were at varying stages of legal intervention. Another five were yet to be assessed. There were five children still on Nauru who were suicidal and some who had attempted suicide.

“These include families with profound medical and mental health issues including being unable to eat or drink, chronic health issues for mother and fathers, chronic depression and toddlers who are losing weight,” it said.

Calls to get all detainees out of Manus and Nauru are now likely to increase.

Asked if the government was capable of getting children to Australia faster, the immigration minister, David Coleman, would only tell Guardian Australia there was “a process in place for medical transfers”, and they had been occurring.

Nor would he comment on the government’s continuing challenge to the federal court’s jurisdiction to hear transfer cases, scheduled for a hearing on Friday.

George Newhouse, director of the National Justice Project, which represents many of the refugees and asylum seekers, queried why the government was still going forward.

“We’ve still got the men on Nauru and Manus and women on Nauru that still need help,” Newhouse said. “Once you get the kids off they’re going to need help. [The government] might be shutting down an avenue for remedy.”