Australia says it will increase its intake of refugees to 20,000 a year, from the current 13,750, in line with recommendations by an expert panel.
Prime Minister Julia Gillard said it was the biggest increase in three decades.
The move was one of 22 key proposals put forward by an independent panel on asylum earlier this month.
Australia has seen an increase in the number of asylum-seekers arriving by boat in recent months.
''This increase is targeted to those in most need: those vulnerable people offshore, not those getting on boats,'' Ms Gillard said.
''People who arrive by boat will get no advantage. It's not worth the risk to life and it's not worth the money, because there is absolutely no benefit to getting on that people-smuggler's boat.''
Following the release of the report earlier this month, Australian lawmakers approved laws allowing offshore processing camps for asylum seekers to be re-established in Papua New Guinea and Nauru.
Ms Gillard said the move to increase humanitarian intake was meant to send clear signals to asylum seekers.
''Message number one, if you get on a boat, you are at risk of being transferred to Nauru or PNG. But message number two, if you stay where you are then there are more resettlement places available in Australia," she said.
She had earlier said she hoped that the offshore processing centres could be re-opened within a month.
More Afghans, as well as Syrians and Iraqis who had fled to refugee camps in Jordan, Turkey, and Lebanon, would be accepted as part of the increased intake, said Immigration Minister Chris Bowen.
"Of course Sri Lankan refugees will continue to figure in our program, as will Burmese in Malaysia, Thailand and India,'' he told reporters.