"We will continue discussions with the PNG government to resolve these matters," he said. Papua New Guinea Prime Minister Peter O'Neill. Credit:Joosep Martinson Last financial year the detention centres on Manus Island and Nauru cost Australia $1.2 billion. Mr O'Neill said the centre's closure would have a negative effect on the Manus Island economy and the government will work with Australia to minimise damage to businesses and workers. "I have considered the ruling of the Supreme Court of Papua New Guinea and welcome this outcome," Mr O'Neill said in a statement on Wednesday.

"Respecting this ruling, Papua New Guinea will immediately ask the Australian government to make alternative arrangements for the asylum seekers." Immigration Minister Peter Dutton has said the asylum seekers will not be allowed to come to Australia. Credit:Alex Ellinghausen Mr Dutton had refused Labor's demands on Tuesday that he urgently fly to PNG to shore up the detention centre's future. The court ruled the detention centre breached the constitutional right of asylum seekers to personal liberty, and PNG's decision scuppers other potential options such as changing that nation's laws to make the centre legal, or turning the facility into an "open centre" so detainees can come and go as they please. It is not yet clear when the facility would shut. The Australian government is now under intense pressure to deal with the problem - either by moving the asylum seekers and refugees to another location, such as Nauru or Christmas Island, or finding a third country to house them.

Earlier on Wednesday, Prime Minister Malcolm Turnbull said the court ruling was "under consideration" and the detention centre was the responsibility of the PNG government, adding "I can't provide a definitive road map from here". Speaking on Sky News, Labor's immigration spokesman Richard Marles said Mr Dutton foolishly tried to downplay the implications of the PNG court ruling by "pretending nothing has happened". Mr Marles said offshore processing was critical to stopping asylum seeker deaths at sea and "this government has made a mess of it from day one". He urged Mr Dutton or Mr Turnbull to travel to Port Moresby to salvage the Manus Island arrangement after the court ruling. Labor, which originally brokered the current Manus Island deal with PNG, envisaged it would exist only for 12 months - by which time most asylum seekers would be processed and resettled, Mr Marles said.

Lawyers for Manus Island detainees say some have been held there more than 1000 days. Mr O'Neill, who has previously said the detention centre had hurt his nation's reputation, said PNG "did not anticipate the asylum seekers to be kept as long as they have" at 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 a part of our society and make a contribution to our community," he said on Wednesday. "It is clear that several of these refugees do not want to settle in Papua New Guinea and that is their decision." Mr O'Neill said many local businesses had invested to expand their operations to support the detention centre. He predicted these businesses would suffer and jobs would be lost. Hundreds of locals who work at the detention centre also face losing their jobs.

He said negotiations with Australia will focus on when the facility will close and how to manage the settlement of legitimate refugees who want to stay in PNG. Mr O'Neill said PNG agreed to house the detention centre to help thwart the people-smuggling trade. Greens immigration spokeswoman Senator Sarah Hanson-Young said two asylum seekers had died at the Manus Island detention centre, it had "destroyed the lives of 1000 others" and would now close. "Peter Dutton is out of options ... Manus Island is over and Australia is responsible for what will happen to the people who are there," she said. Follow us on Twitter