Prime Minister Julia Gillard has admitted that her government's people-swap arrangement with Malaysia is technically shelved by growing opposition from the Parliament, blaming the Liberals for the immigration debacle.

Ms Gillard said that for now, federal authorities will have to implement the current system of onshore processing in addressing the influx of boat people but at the same time, she laid the blame on Opposition Leader Tony Abbott.

On Friday, the Prime Minister told ABC that more boats should arrive in droves and in such event "there is one person to blame, Tony Abbott, for this mindless negativity, his reckless strategy which has brought offshore processing to an end."

Abbott, however, refused to budge and insisted that his support for the government's refugee policy will all depend on the UN-approved offshore processing, which he said is exclusive for countries that signed up to the refugee convention.

He added that Kuala Lumpur was not a party to that agreement.

On its part, Malaysia did not hide its disappointment of the political wrangling that marred its deal with Canberra, which it underscored as a practical way of addressing one of the "hidden horrors of the modern world."

"People trafficking is one of the hidden horrors of modern life and the arrangement between our governments would have tackled it in a way that protected the interests of Australia, Malaysia and, above all, the migrants involved," Kuala Lumpur said in a statement released on Friday.

Notwithstanding the scrapping of the deal, which it hopes is but temporary, Malaysia expressed optimism that a new arrangement with Australia can be reached soon.

"Building on the momentum established over the past few months, we will continue to work with Australia to find new and effective ways to deal with this 21st century trade in human misery," the Australian Associated Press (AAP) reported a Malaysian government as saying.

Meanwhile, Abbott has suggested that much of the immigration dilemma stemmed from the lack of imagination displayed by Ms Gillard, who "should have known weeks ago that the Malaysia people swap was dead, she has never had a plan B."

Brushing aside the tussles engaged on by the Labor-led government and the Liberals, the Australian Green Party called on Ms Gillard and Abbott to cease bickering and instead focus on making the onshore processing as humane and efficient as possible.

"Rather than blaming each other, let's get on with the job we've already signed up to do under the refugee convention," Greens immigration spokeswoman Sarah Hanson-Young told AAP while adding that Australia needs to take in at least 20,000 more refugees if only humanitarian reason.