The federal government says transferring hundreds of men from Manus Island detention centre to Christmas Island would restart the boats that killed 1200 people.
Immigration Minister Peter Dutton won't back down from his decision not to allow about 850 men in the centre into Australia.
It was a message also firmly sent by Prime Minister Malcolm Turnbull on Thursday, one day after PNG Prime Minister Peter O'Neill revealed the centre would close.
The decision followed a PNG Supreme Court ruling that the centre was illegal.
As talks continue between the federal government and Papua New Guinea, the fate of the asylum seekers and refugees remains in limbo.
Mr Dutton said those who had already been assessed as refugees were free to live in PNG.
"We settle people in the right way," he told ABC on Thursday.
"We bring people to the country who are refugees by plane. We provide them with significant settlement support."
The immigration minister repeated his commitment to working with the PNG government to resolve the issue.
"But we've been very clear that, under no circumstance will they be coming to our country," he said.
The prime minister on Thursday warned Australians against getting "misty-eyed" about the issue.
Labor, which created the latest offshore processing regime in 2013, accused Mr Dutton of setting a new benchmark in incompetence.
Opposition Leader Bill Shorten said the government had been ignoring a "trainwreck" for months.
PNG says the centre won't be shut down immediately but its high commissioner to Australia says ultimately the decision about the fate of the asylum seekers rests with Canberra.
PNG's responsibility is only to process them.
"It's not for us to decide or urge Australia to take them on," Charles Lepani told ABC radio.
"We cannot force them to settle (in PNG)."
