By Gabrielle Dunlevy, NZN Southeast Asia correspondent
An Indonesian government spokesman has confirmed preliminary talks have been held on plans to house asylum seekers on an island funded by the Australian government.
Thousands of asylum seekers and refugees are awaiting resettlement in Indonesia, deterred from making the remainder of the journey to Australia by Canberra's boat turnback policy.
Co-ordinating Minister for Political, Legal and Security Affairs Luhut Panjaitan, who visited Sydney this week, told The Jakarta Post and Straits Times newspapers he had early talks with Australia on an island shelter.
Ministry spokesman Agus Barnas confirmed to NZN the plan was "still under discussion" and was first floated under previous president Susilo Bambang Yudhoyono.
"In the talks, there was such an idea," he said.
"It was one of the discussion topics among others like intelligence co-operation, combating terrorism, trade, things like that."
Mr Agus said among many conditions that needed to be resolved were funding and the period refugees would wait for resettlement.
"Christmas Island is still chaotic now, right? I pity them," he said.
"So, maybe that's one of the considerations. Let's just wait."
The Asia Pacific Refugee Rights Network likened the plan to other controversial refugee deals with Cambodia and Malaysia.
The group's Julia Mayerhofer says Indonesia has not signed the UN refugee convention, so asylum seekers already struggle to access basic services, are subject to immigration detention, and do not have the right to work.