The Federal Opposition has accused the government of 'robbing Peter to pay Paul' by diverting foreign aid to pay for the upkeep of asylum seekers in Australia.
Foreign Minister, Senator Bob Carr, has confirmed plans to divert $375 million from the aid program to fund the cost of asylum seekers being processed domestically.
'As the OECD sees it, money spent supporting refugees on your own soil is a valid expenditure of aid money,' he said.
'Common sense says if you are supporting refugees in Australia it has the same effect as supporting them in refugee camps in Jordan, in Turkey (and) in any other part of the world.'
But Opposition Immigration Spokesman, Scott Morrison, dismissed the decision as 'massive hypocrisy'.
He pointed out that the $375 million figure was more than Australia was spending in Afghanistan, Sri Lanka, Iraq and Pakistan.
'The Government is basically robbing Peter to pay Paul here in terms of the aid program,' he said.
Mr Morrison doubted Australians would accept the argument that spending money on people overseas, where they were in desperate need, was the same as spending money on people that come 'illegally' by boat.
'I don't think Australians will buy that at all.'
Cabinet minister, Brendan O'Connor, said the Government was 'unapologetic' about its decision.
'We have a record amount of money going to foreign aid ... because we are a generous nation,' he told Sky News.
'I don't think that should prevent us from providing basic entitlements and resources to people seeking asylum and indeed having their claims determined here.'