Australian Prime Minister Julia Gillard's government will proceed with plans to set up a regional processing centre in Malaysia for asylum seekers despite the opposition party and the Greens

condemning the proposal.

Greens MP Adam Bandt Monday moved a motion condemning the deal in the House of Representatives, the Australian Associated Press reported.

But Gillard was standing firm on the issue.

"Now, I understand people in Parliament have different views but I'm determined as prime minister to strike this arrangement with Malaysia," Gillard told reporters in Sydney today.

"It's an innovative approach and part of a regional solution," she said.

Meanwhile, the federal opposition has seized on the latest asylum seeker boat arrival as evidence that people smugglers have not been deterred by the government's Malaysia refugee swap proposal.

As federal Parliament moved a step closer to condemning the yet-to-be finalised Malaysia deal, Border Protection Command intercepted the boat carrying an estimated 56 people north of Ashmore Reef on Monday.

"The passengers will be transferred to Christmas Island pending removal to another country," Home Affairs Minister Brendan O'Connor said in a statement.

The boat is the fourth since the government announced its plan to send up to 800 asylum seekers to the back of the queue in Malaysia in exchange for 4,000 already processed refugees.

The Canberra government hopes the plan will undermine the business model of people smugglers.

-  Bernama