SYDNEY • Australia's hardline immigration policy was thrown into turmoil yesterday after Papua New Guinea (PNG) ordered a processing camp to close, leaving the fate of hundreds of asylum-seekers hanging in the balance.

The move to shutter the Australian-funded Manus island facility follows a Supreme Court ruling on Tuesday that holding people there was unconstitutional and illegal.

Piling further pressure on Canberra, just weeks away from an expected election campaign, an Iranian refugee set himself on fire during a visit by UN officials to Nauru, the other Pacific nation where Australia sends boat people. And four others on the tiny outpost reportedly attempted suicide by drinking washing powder on Tuesday.

"Respecting this (court) ruling, Papua New Guinea will immediately ask the Australian government to make alternative arrangements for the asylum seekers at the regional processing centre," Prime Minister Peter O'Neill said.

Papua New Guinea's former opposition leader Belden Namah had challenged the Manus arrangement in court, claiming it violated the rights of asylum seekers.

The Supreme Court found that detaining them on the island was "contrary to their constitutional right of personal liberty".

Despite this, Australian Immigration Minister Peter Dutton was adamant that none of the 850 or so men held there would enter his country and that Canberra's policy - designed to deter others wanting to make the risky journey by boat - would not change.

"As I have said, and as the Australian government has consistently acted, we will work with our PNG partners to address the issues raised by the Supreme Court of PNG," he said in a statement after Mr O'Neill's decision.

Mr O'Neill did not set a timeframe for the closure. He said he did not anticipate asylum seekers being kept for so long at the Manus camp, which was reopened in 2012 by Australia after being closed five years earlier when the then Labor government abandoned offshore processing.

AGENCE FRANCE-PRESSE