Australian Prime Minister Tony Abbott claimed his country would do "whatever we need to do" to combat people-smuggling as he refused to deny reports the Australian navy paid thousands of dollars to get smugglers to turn a boat around.
Media in Australia and Indonesia are reporting that people-smugglers on a boat carrying 65 asylum-seekers were paid about A$5,000 each to abandon their journey to Australia and return to Indonesia after being intercepted at sea.
The boat was carrying asylum-seekers from Bangladesh, Myanmar and Sri Lanka, and had come ashore on Rote island in eastern Indonesia in late May after they were intercepted.
"The short answer is: the Australian government will do whatever we need to do to keep this evil (people-smuggling) trade stopped," Mr Abbott told radio station 3AW when repeatedly asked if crew had been paid by an Australian official.
"By hook or by crook, we are going to stop the trade," he said, praising officials for being "incredibly creative" in responding to asylum seekers.
The Australian leader told reporters later he would not reveal any details of the government's border-protection policies "because I'm not in the business of implicitly or explicitly giving information to people smugglers".
Agus Barnas, spokesman for Indonesia's coordinating ministry for political, legal and security affairs, said Mr Abbott's comments could be interpreted as endorsing bribery and might encourage people smuggling.
Indonesia is currently detaining the captain of the asylum-seeker vessel, and said if the claims were correct "we would truly regret that something like this could happen."
"Australian coastguard officials blocking the people-smuggling boat put the money in six black plastic bags and and handed it over," a spokesperson for the Indonesian foreign ministry said.
"According to the detained crew, the Australian coastguards went to the ship to give the money A$5,000 per person so that they go back to Indonesia."
Opposition politicians have criticised the "shroud of secrecy" around the issue and called on Mr Abbott to reveal what really happened with the boat.
"Either this happened or it didn't. Either the Australian government has paid for the trafficking of people on the high seas or it didn't," said Australian's Green Party senator Sarah Hanson-Young.
"The prime minister has to be up front."
Australia has a policy of turning back and refusing to resettle any migrant who arrives on its shores by boat.
The United Nations and human rights groups have criticised Australia over its tough asylum-seeker policy, which Abbott defends as necessary to stop deaths at sea.