The Australian federal government hopes to continue discussions with Papua New Guinea after its government decided to shut down the Manus Island detention centre.

MORE: Papua New Guinea rules Australia's detention of asylum seekers illegal

The decision by Prime Minister Peter O'Neill on Wednesday followed a PNG Supreme Court ruling that the centre was illegal.

Responding to the closure announcement, Immigration Minister Peter Dutton committed to working with PNG partners to "address the issues" raised by the Supreme Court.

He said none of the 850 asylum seekers and refugees would be resettled in Australia.
"We will continue discussions with the PNG government to resolve these matters," Dutton said.

When announcing the closure, O'Neill said his government had never expected the men to be in the centre for so long.

But he was proud that his country had been able to stop the loss of life due to people-smuggling.

"Papua New Guinea will immediately ask the Australian government to make alternative arrangements for the asylum seekers currently held at the regional processing centre," he said in a statement.

Dutton agreed PNG's role in Australia's regional processing had stopped many people dying at sea.

Labor said Dutton should already be in PNG to resolve the issue while the Greens called for the men to be immediately brought to Australia to be processed.