Asylum seekers who arrive in Australia by boat can now be processed in Nauru and, if found to be genuine refugees, can be resettled there under an agreement signed by Prime Minister Kevin Rudd and Nauru's president Baron Waqa.

The memorandum of understanding is similar to a deal Mr Rudd struck with Papua New Guinea prime minister Peter O'Neill a fortnight ago.

Mr Rudd says refugees who arrive in Australia will be sent offshore for processing and will be free to "settle and reside in Nauru".

He says the new deal is consistent with Australia's obligations under the refugee convention.

Key points: Australia, Nauru strike deal that will see asylum seekers processed and refugees resettled in Nauru

Australia, Nauru strike deal that will see asylum seekers processed and refugees resettled in Nauru Number of refugees to be resettled in Nauru up to the country's government

Number of refugees to be resettled in Nauru up to the country's government Rudd says it is a similar deal to the one struck with Papua New Guinea

Rudd says it is a similar deal to the one struck with Papua New Guinea Australia to spend almost $30 million on aid in Nauru in 2013-2014

Australia to spend almost $30 million on aid in Nauru in 2013-2014 Rudd does not reveal election date

Rudd does not reveal election date No single males will be resettled in Nauru

"The memorandum of understanding signed on Saturday ensures the unauthorised maritime arrivals transferred to Nauru will receive proper and humane treatment," Mr Rudd said.

He also says he understands Nauru is a small country and the number of people who could be permanently resettled there would be up to the government of Nauru.

"Our governments have agreed that the Republic of Nauru will not only maintain and extend its regional processing capacity, but it will also provide a settlement opportunity to persons it determines are in need of international protection," Mr Rudd said.

"This means that those seeking safe haven will have the opportunity to settle and reside in Nauru."

The announcement comes just a fortnight after asylum seekers being held on Nauru rioted, causing extensive damage to the facility there.

In its economic statement on Friday, the Federal Government said its offshore processing plan was expected to cost $1.1 billion.

The latest announcement is part of Labor's move to ensure no asylum seeker that arrives in Australia by boat will be resettled in Australia.

Rudd pledges $30m in aid to Nauru

Mr Rudd has also announced the Australian Government will spend almost $30 million on aid in Nauru in 2013-14, money he says is accounted for in the economic statement.

"Implementing these sorts of arrangements with people as ugly as people smugglers is always hard," Mr Rudd said.

Country profile: Nauru Population: 9,400 Area: 21 square kilometres GDP: $US63 million Life expectancy: 66 Religions: Protestant (46 per cent), Catholic (33 per cent) Industries: phosphate mining, offshore banking, coconut products Source: United Nations, CIA World Factbook

But he says the only way to deal with the issue is to attack the "core business" of people smugglers by preventing them from promising asylum seekers the prospect of resettlement in Australia.

"Those folks are not going to be allowed to settle in Australia," he said.

Mr Rudd was also asked whether he would be announcing a federal election date, but says no decision has been made.

Mr Waqa says his country is happy to play a part in a regional solution to the people smuggling problem.

"The problem of asylum seekers is not just Australia's," he said.

He says Nauru's attitude has not changed from the original so-called Pacific solution introduced by the Howard government, and that his country is happy to help.

Nauru's total population is just over 9,000.

Burke hints at future resettlement deals

Immigration Minister Tony Burke, who also spoke at the media conference in Brisbane, says there may be more deals with Australia's neighbours to resettle refugees.

Sorry, this video has expired Kevin Rudd signs a new deal with Nauru's president, similar to the one recently struck with PNG.

Mr Burke says other countries have expressed interest in the arrangement.

"I'm prepared to say that there are other countries who have raised this with us as well," he said.

"We have made a decision that we're not going out there selling the idea or trying to talk people into agreeing.

"But there are a number of countries in the region who have signed the convention and who have a genuine commitment to wanting to take a regional approach."

Greens leader says Nauru deal is absurd

Greens leader Christine Milne says Nauru is an island of only 21 square kilometres, virtually no food is produced and the tiny country struggles to provide fresh water.

"There's no way that Nauru can absorb a large number of people in a resettlement program," she said.

"Frankly it's absurd. What we saw from the Prime Minister today was another stage-managed announcement to try to outdo Tony Abbott.

"What will be the next cruel blow to outdo Kevin Rudd?"

Tent accommodation for asylum seekers on Nauru. ( Department of Immigration and Citizenship )

Opposition immigration spokesman Scott Morrisson has refused to be drawn on whether a Coalition government would honour the deal that has been struck with Nauru.

"The arrangements that are included in this announcement today involve a patch-up job for the problems that Labor have created for itself in allowing the processing centre to burn down," he said.

"Those patch-up arrangements are obviously necessary but they don't amount to any additional capacity on Nauru for offshore processing."