Asylum seekers and human rights groups say Papua New Guinea's decision to relocate hundreds of people held in an Australian-run detention centre at Manus Island to a remote town will expose them to violence and inadequate medical care.

"We are concerned that these men are being moved to a place with even higher security risks than Manus Island and one that has inadequate facilities to deal with people who require medical treatment," said Kate Schuetze, Pacific researcher for Amnesty International.

PNG Immigration officials told asylum seekers on Monday that part of the controversial Manus Island camp, north of the PNG mainland, would close on May 28, with the rest of the compound to shut on June 30, Reuters news agency reported.

PNG officials could not be reached immediately for comment.

The relocation of detainees comes as PNG prepares to close the centre at the end of October when the contract of the camp operator Ferrovial ends.

The centre, which is currently home to more than 800 people, was deemed illegal by PNG's Supreme Court last year.

"The centre won't close drop dead on October 31. They will start to decommission parts of the centre in the run up," Peter Dutton, Australia's Immigration Minister, told 3AW radio in the Australian city of Melbourne.

READ MORE: Papua New Guinea to close Australian refugee centre

The 700 men found to be genuine refugees have been told that they have the option of temporarily relocating to a transit centre near the town of Lorengau, settling in the PNG community or returning to their countries of origin, the Australian Broadcasting Corporation (ABC) reported.

Those whose claims have been rejected have been told to return to their countries of origin before the end of August, when a 20,000 Australian dollars ($14,842) cash incentive to return home will cease.

'Manus prison is full of tension'

Those held on Manus Island are allowed to travel to Lorengau during the day but nearly all choose to remain in the detention centre amid allegations of assaults and threats against them by residents.

Detainees waiting to be accepted by the US in a refugee resettlement deal, which US President Donald Trump described as "dumb", will be settled in a remote area near Lorengau - a major town in the island.

The deal to take asylum seekers from Manus Island and Nauru to the US was reached between the Australian government and the administration of former US President Barack Obama.

Behrouz Boochani, a Kurdish Iranian who has been in detention for four years said via his Twitter account that "Manus prison is full of tension".

"I am sure the refugees will resist and they will have to use force. I think there will be a big riot," Boochani told ABC.

Funded by Australia, the two remote camps in Nauru and Manus Island were set up in 2013 to detain asylum seekers indefinitely, who arrive by boat.

Under Australia's controversial immigration laws, anyone intercepted while trying to reach the country by boat is sent for processing to these camps. They are never eligible to be resettled in Australia.

Manus Island and Nauru asylum centres have been condemned by human rights groups and the United Nations for cramped conditions, violence and inadequate medical facilities.