Australia and the United States have announced a plan to swap up to 200 asylum seekers every year.
Australia has a camp for asylum seekers in Nauru
Migrants held by the US in Guantanamo Bay will be resettled in Australia, while Canberra will send people held in its offshore detention camps to the US.
The move is aimed at deterring would-be refugees by preventing them from reaching their destination of choice.
But critics say the plan could backfire on Canberra, as many refugees around the world are hoping to get to America.
The first asylum seekers to be exchanged are likely to be 83 Sri Lankans and eight Burmese who are being held in Australia's off-shore detention centre on the tiny Pacific island of Nauru.
If they qualify as genuine refugees, they could soon be resettled somewhere in the US.
In return, the Americans will be allowed to send Cuban and Haitian detainees held at Guantanamo Bay (the naval base housing asylum seekers, rather than the prison) to Australia.
Both Canberra and Washington insist the move will deter illegal migrants.
Mr Howard insisted the plan would deter illegal migrants
The hope is that potential refugees might think again about trying to get to the US if there was a chance they could end up in a faraway place like Australia, and vice versa.
Australian Prime Minister John Howard insisted the plan would also deter people smugglers.
"The thing that discourages people from people smuggling is the fact that we make it very plain that people will not be allowed to reach the Australian mainland," Mr Howard told local media.
But critics believe that the plan could backfire on the Australians, by encouraging asylum seekers from Asia and the Middle East who want to build a new life in the US.
An immigration spokesman for the Australian opposition Labor Party, Tony Burke, said the new policy would therefore mean even more boat people arriving on the shores of Australia.
"If you are in one of the refugee camps around the world, there is no more attractive destination than to think you can get a ticket to the USA," Mr Burke said.
"What John Howard is doing is saying to the people around the world: if you want to get to the US, the way to it is to hop on a boat and go to [Australia's] Christmas Island."
Australia has often been criticised by human rights groups for the uncompromising stance it takes on asylum seekers.
Under a policy introduced in 2001, would-be migrants are now intercepted at sea, and are routinely sent to off-shore processing camps in the South Pacific where their refugee applications are assessed.
The tactic is designed to ensure they never set foot on the Australian mainland.
Even if they are deemed genuine refugees, efforts are made to find a third country willing to accept them, although in practice this often fails and they are eventually accepted into Australia.