The Federal Government says Papua New Guinea is ultimately responsible for 850 asylum seekers and refugees on Manus Island, following a Supreme Court ruling.

Key points: Memorandum of Understanding says refugees should be settled in PNG, Dutton claims

Memorandum of Understanding says refugees should be settled in PNG, Dutton claims PNG High Commissioner says refugees cannot be forced to live in PNG

PNG High Commissioner says refugees cannot be forced to live in PNG International law says both nations have responsibility, experts say

Australia has also ruled out transporting those in the facility to Christmas Island, as the Coalition explores alternatives to accommodate the group.

PNG Prime Minister Peter O'Neill wants to close the processing facility at Manus Island, after the country's Supreme Court found the detention of people there was illegal.

Sorry, this video has expired Turnbull warns against being 'misty-eyed' on offshore detention

Negotiations have continued between Australia and Papua New Guinea about the fate of the facility and what country is responsible for those being held there.

Prime Minister Malcolm Turnbull spoke with his Papua New Guinea counterpart on Thursday night and, during the call, made it clear that the detainees would not be coming to Australia.

Australian officials will travel to PNG next week to try to resolve the issue.

Immigration Minister Peter Dutton said asylum seekers and refugees on the island were ultimately the responsibility of Papua New Guinea.

"The Memorandum of Understanding is fairly clear, and that's understood by both sides," he said.

"And under that arrangement people are assessed [and] if they're found to be owed protection — that is, if they're found to be refugees — then they settle in PNG."

Mr Dutton said while he believed the PNG Supreme Court's decision was "not binding" on Australia, the Federal Government would still provide assistance to resolve the situation.

However, the PNG High Commissioner to Australia Charles Lepani had earlier said the asylum seekers were Australia's responsibility.

Labor MP Melissa Parke — who previously worked as a lawyer for the United Nations — said under international law Australia had always been responsible for the asylum seekers sent to Manus and Nauru

She argued for resettlement in Australia or in countries where it could be guaranteed human rights would be respected.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 6 minutes 25 seconds 6 m Leigh Sales speaks with Peter Dutton on Manus Island responsibility

'We can't force refugees to live in PNG': Lepani

Mr Lepani said the agreement only applied to those refugees who had chosen to live in PNG.

"Those who are found to be legal refugees, we invite them to stay in Papua New Guinea, to be part of our community but if they refuse, we cannot force them," he said.

Mr Lepani said seven asylum seekers had been resettled in PNG, but hundreds more detainees— half of whom were genuine refugees — were still uncertain of their immediate future.

Mr Dutton said there had been conversations with Nauru, as the Federal Government looks to find alternative accommodation, and that there was excess capacity in the detention centre network.

He also ruled out sending asylum seekers and refugees to Christmas Island as a possible option.

"That would be a green light for people smugglers … you would have drownings at sea," Mr Dutton said.

"People are seeing scenes in Europe now where people are drowning in the Mediterranean, people have flown across borders in a disorderly way."

Prime Minister Malcolm Turnbull had earlier warned against being "misty-eyed" over the Coalition's immigration policy, as tensions emerge within the Federal Opposition about Labor's support for offshore processing.

University of New South Wales Kaldor Centre for International Refugee Law Madeline Gleeson said both nations had responsibility.

"It is important to note that this is a grey area and deliberately so," she said.

"To date, it's been politically expedient that there has been this ambiguity over who is responsible under international law and how does that play out.

"This week we're seeing the problem, but the one thing that is clear is that jointly both countries are responsible."