Authorities have begun processing 181 asylum seekers and four crew from a boat intercepted near Christmas Island on Monday evening, the ninth illegal entry vessel to arrive this year.
Meanwhile, the federal opposition has raised the prospect of reintroducing key elements of the former coalition government's Pacific Solution for the detention and processing of asylum seekers.
With facilities on Christmas Island at crisis point, opposition immigration spokesman Scott Morrison has called on the government to consider using Nauru and Manus Island in Papua New Guinea to detain asylum seekers.
The opposition has already said it would reintroduce temporary protection visas, which were also a key element of the Howard government's border protection policy.
"We have no problem with finding alternative offshore detention arrangements, whether that's in another country or within another excised Australian territory," Mr Morrison said on Tuesday.
"I mean, that's what they should have been doing for the last six months when they knew that the boats were surging. They should have been looking for an alternative offshore destination, as we did. We had Nauru and Manus."
Immigration Minister Chris Evans said the Pacific Solution was a costly failure and did nothing to foster regional co-operation on people smuggling.
"The Rudd government pledged to dismantle the Pacific Solution. It has been done and there is no intention to return to that shameful period," Senator Evans said.
But the government is under increasing pressure over its border protection policy as Christmas Island nears full capacity.
Of the 1801 detainees on the island, 1460 are in the detention centre, including 200 in tents, while 288 are in the construction camp facility. Another 45 people are at the Phosphate Hill compound and eight are in community detention.
A group of between 80 and 90 people will leave the island on Wednesday night after being granted visas.
However, another boatload of asylum seekers similar to the number intercepted on Monday night would push the island beyond its detention capacity of 1900.
The government had a contingency plan to process asylum seekers at a purpose-built facility in Darwin, but Prime Minister Kevin Rudd said Christmas Island would remain the first option.
"My advice from officials is that there is capacity there," Mr Rudd said on Tuesday.
"Our advice is that Christmas remains the best place to accommodate people."
Greens immigration spokeswoman Sarah Hanson-Young restated a call for Christmas Island to be abandoned and for all asylum seekers to be processed on the mainland.
"Sadly both major parties have shown they retain a blinkered and inappropriate approach to asylum seekers as we enter an election year," Senator Hanson-Young said.
"The prime minister says his advice is that Christmas Island remains the best place to hold people, but he must be the only one who still believes this advice is accurate."