The new laws intended to send all asylum-seekers who arrived in Australia by boat to detention camps on the remote Pacific island of Nauru.

Only those who are intercepted on outlying islands or at sea have their cases processed offshore, while those arriving on the mainland have their claims handled inside the country.

The proposed legislation sparked a revolt against Mr Howard, with three government politicians crossing the floor to vote against the Bill.

It still passed in the Lower House, where the ruling Liberal Party has a comfortable majority. But Mr Howard accepted that his Government’s one-seat majority in the Senate meant that he did not have the numbers to pass the legislation.

The scrapping of the Bill is seen as the biggest setback in the ten years that Mr Howard’s centre-right Government has been in office. However, he shrugged off any damage to his authority, saying that the Liberal Party was proud of the breadth of its opinions.

The legislation was drawn up to ease Indonesian concerns about asylum-seekers trying to reach Australia from its territory. Jakarta believed that by granting asylum to 43 Papuans, Canberra was supporting a secessionist movement in the eastern Indonesian province of Papua.

Indonesia was also angered by the implication that human rights abuses were taking place in Papua.

Australia sees Indonesia as crucial in its efforts to stop people-smugglers. After it granted asylum to the Papuans, who had arrived in the country’s remote north by boat in January, relations between the countries became strained and Indonesia temporarily withdrew its ambassador in protest.

But while Mr Howard said that the new laws were not crucial to Australia’s ties with its larger neighbour, a spokesman for the Indonesian Foreign Ministry was critical of the Bill’s failure. “Indonesia deeply regrets the Government of Australia’s failure to legislate the policy on asylum-seekers,” the spokesman said. (Reuters)

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