A company paid about $440 million a year to run the Manus Island detention centre is allowing drunken staff to misbehave, the Papua New Guinea government says, ordering its own officials to intervene after Australian workers allegedly sexually assaulted a local female employee.

Prime Minister Peter O'Neill has announced he will impose a "zero tolerance" approach to alcohol and drugs at the centre, including regular substance testing, to ensure an alcohol ban there is properly enforced.

Papua New Guinea Prime Minister Peter O'Neill. Credit:Joosep Martinson

He said the company in charge of contract workers had not "maintained discipline" and PNG's chief migration officer would impose stricter controls.

The Australian government pays Transfield Services about $440 million a year to operate the Manus Island centre, and has a separate contract for an asylum seeker facility at Nauru.