A unanimous vote by the 34 members rejected the informal proposal by the new prime minister of Australia, Julia Gillard.

She put forward the plan during a telephone conversation last week with Timor-Leste President Jose Ramos-Horta who was quick to say that no formal request by Australia had been received.

Australia is struggling to cope with a continuous flow of boat people, mostly from Sri Lanka and Afghanistan. They pay large amounts of cash to notorious people smugglers for passage on often unseaworthy vessels that, when intercepted by maritime authorities and the military, are often on the verge of sinking.

At the beginning of June, Australia began shipping refugees from its overcrowded detention facility on Christmas Island in the Indian Ocean to isolated communities on the mainland, a controversial move with a federal election due later this year.

Gillard's proposal regarding Timor-Leste is seen by some surrounding countries as an attempt to regionalize what is essentially an Australian problem.

Ramos-Horta said he was "prepared to listen" to Australia's idea of a temporary shelter for boat people on the island but only if it was a temporary arrangement and run by an organization such as the United Nations.

"Purely on humanitarian grounds, we are prepared to listen to the details of the proposal on the part of Australia about what where this processing center would be, how long it would be on our soil, how many people we would have to accommodate in this center, who would shoulder the burden of the financial cost of it, all of that," he said.

Timor-Leste, formerly East Timor until 2002, is a mountainous and poor country lying off Australia's northern coast. It occupies the eastern half of the island of Timor. The western half remains part of Indonesia.

Ramos-Horta also said he doesn't want other countries including Indonesia to use Timor-Leste as a dumping ground for their own refugees held in overcrowded facilities.

While Ramos-Horta is sympathetic to the idea in principle, Timor-Leste's Deputy Prime Minister Jose Luis Guterres said before the parliamentary vote that his country was "very unlikely" to accept the idea.

Australia has the capacity to accept asylum seekers, he said, or it should increase direct aid to countries such as Sri Lanka and Afghanistan.

For several years Australia has been urging Indonesia to crack down on people smugglers operating within its borders. Many are taking money from illegal immigrants in Indonesia who see their stay there as a stopover on their way to their final destination, Australia.

Australia has said Indonesian maritime authorities haven't been keen to intercept the boats that leave their shores or pass through their territorial waters, in the hope the problem will simply sail onward.

Australia's detention center on Christmas Island was expanded late last year to 2,000 beds but soon reached its limit this year.

Immigration authorities hold some refugees suspected of having criminal backgrounds in detention centers in larger cities such as Sydney for further investigation into their backgrounds.

But in June the first batches of refugees were shipped off Christmas Island to smaller, remote purpose-built processing centers, including one in the small town of Leonora, more than 400 miles inland in the middle of the deserts of Western Australia state.

The former mining town, population 1,200, has welcomed the refugees and their new camp, Jeff Carter, head of the town council, said.

"Personally, I've got no great objection," he said.

"I don't agree with the people coming by the boats. But our government does accept them, to help them when they come to our shores. I'd just like to help people that way if we can. I hope that the town would accept them."

The government said the refugees will stay in Leonora up to six months while their application for refugee status is processed.

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