One of Indonesia's most senior cabinet ministers has denied offering Australia an island to temporarily house refugees and asylum seekers.

The Jakarta Post on Friday reported on its front page that Coordinating Minister for political, legal and security affairs, Luhut Panjaitan, had suggested offering an island as a temporary refugee camp.

The former refugee camp on Galang Island in Indonesia in 2005. Credit:Eddie Jim

The newspaper reported Mr Panjaitan had said Indonesia's "kind offer" would come with strict requirements, ranging from requiring Australia to entirely finance the camp to limiting the period of use of the island.

But Mr Panjaitan told Fairfax Media he had never made the offer of the island and to ignore the newspaper report.