Australia should transfer asylum-seekers offshore to places such as Nauru and Papua New Guinea to deter boatpeople from risking their lives at sea, a government-ordered report recommended.
An expert panel headed by former defence chief Angus Houston on Monday said Canberra should introduce greater disincentives to stop would-be refugees from paying people-smugglers to bring them by boat to Australia.
"Onshore processing encourages people to jump on a boat," he said.
The much-awaited independent report also called on Canberra to work closely with Indonesia, a transit country for many boatpeople, and Malaysia to stem the influx of maritime arrivals as well as lift its annual humanitarian intake.
"Over time, a comprehensive regional framework will reduce the lure of irregular maritime migration but until then, the panel believes Australia needs to include the prospect of processing options outside of Australia," it said.
"To support this, it is the panel's view that the Australian parliament should agree, as a matter of urgency, to legislation that will allow for the processing of irregular maritime arrivals in locations outside Australia."
More than 100 boats carrying over 7,500 suspected asylum-seekers have arrived in Australia so far this year, after the government failed to pass legislation aimed at deterring them by sending them to Malaysia.
The so-called 'Malaysia solution' would have seen boatpeople arriving in Australia transferred to the Southeast Asian nation, with Canberra resettling thousands of that country's registered refugees in return.
The proposal was scuttled by the opposition and the Greens, who refused to pass laws allowing off-shore processing, prompting the government to ask Houston to review the policy in hopes of breaking the political deadlock.
His panel recommended the government lift its annual humanitarian intake to about 20,000, up from the current 13,750, and consider increasing it further to 27,000 within five years.
"We recommend a policy approach that is hard-headed, but not hard-hearted, that is realistic not idealistic, that is driven by a sense of humanity as well as fairness," Houston said.
The retired air chief marshal said some 964 asylum-seekers and crew had lost their lives at sea while trying to making it to Australia since late 2001, with 604 of these perishing since October 2009.
"Like all Australians, we are deeply concerned about this tragic loss of life at sea," he said. "To do nothing is unacceptable."