Prime Minister Julia Gillard says it is unclear whether the High Court decision on the Malaysian asylum seeker swap deal rules out any offshore processing in the future.
Ms Gillard met with her cabinet in Brisbane on Wednesday night to consider oral advice from the solicitor-general on the High Court decision quashing the deal.
She told reporters in Brisbane on Thursday the advice showed there were questions about whether any offshore processing was possible.
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"There are questions over the future of offshore processing arrangements that must be considered," she said.
"And it is far from clear whether the court's ruling would, practically speaking, permit the operation of offshore processing in other locations, even in locations where offshore processing has been conducted in the past."
But Ms Gillard said she was determined to break the people smugglers' business model, which the Malaysian agreement would have done.
The High Court's decision was "disappointing", and went against the government's own legal advice about the legality of the Malaysian agreement.
"Yesterday ... what we saw was the High Court enter into a different construction of the relevant section of the Migration Act," she said, adding that it turned on its head the government's understanding of migration law.
Ms Gillard said the government would digest the legal advice and make a comprehensive statement outlining the government's plans.
The court's ruling represented a missed opportunity, she said.
"A missed opportunity to enhance our region's response to the evil of people smuggling.
"A missed opportunity to make a real and important contribution to the region's approach to the transnational crime of people smuggling through the Bali framework.
"And it is a missed opportunity ... to send a message to asylum seekers not to risk their lives at sea and get into boats."
Immigration Minister Chris Bowen said the ruling was likely to have a significant impact on any government's attempts to send unaccompanied minors to an offshore location.
"The situation with unaccompanied minors has changed under law," he said.
Sending unaccompanied minors offshore would involve the immigration minister giving written permission that would be judicially reviewable, he said.
"Which would make the removal of unaccompanied minors to any offshore location, under any regime, one that is highly problematic."
The prime minister defended Mr Bowen when asked if the minister had offered to resign following the court's ruling.
"Minister Bowen at all times acted on the best advice available to him and acted with a clear determination and resolve to break the people smugglers' business model," Ms Gillard said.
"That's what I asked him to do as minister."
Ms Gillard said the High Court had changed the interpretation of immigration law, singling out chief justice Robert French for mention.
"His honour ... considered comparable legal questions when he was a judge of the Federal Court and made different decisions to the one that the High Court made yesterday," she said.
Ms Gillard said the government would respond to the decision carefully and methodically.
Ms Gillard said she would not rule out using Nauru or reintroducing temporary protection visas despite opposition from Labor's Left faction.
"The only guarantee that I ever give is every decision we take will be taken in the national interest," she said.
"We will make a comprehensive statement when we are in a position to."
Mr Bowen has spoken with his Malaysian counterpart and says the latter understands the government's legal position.
"He has recommitted Malaysia to working very closely with Australia on all these issues," he said.
"He has indicated that from his point of view this does not in any way diminish or affect the very warm working relationship between Australia and Malaysia.
Mr Bowen said he had no intention of stepping down as immigration minister because he had an obligation to the prime minister, the government and the country to see his job through.
"The easy option would be to resign," he said.
"The only thing that would happen if I resign would be my quality of life might go up, nothing else is going to be impacted by that."
Ms Gillard said the government would digest the legal advice and make a comprehensive statement outlining the government's plans.
The court's ruling represented a missed opportunity, she said.
"A missed opportunity to enhance our region's response to the evil of people smuggling.
"A missed opportunity to make a real and important contribution to the region's approach to the transnational crime of people smuggling through the Bali framework.
"And it is a missed opportunity ... to send a message to asylum seekers not to risk their lives at sea and get into boats."
Immigration Minister Chris Bowen said the ruling was likely to have a significant impact on any government's attempts to send unaccompanied minors to an offshore location.
"The situation with unaccompanied minors has changed under law," he said.
Sending unaccompanied minors offshore would involve the immigration minister giving written permission that would be judicially reviewable, he said.
"Which would make the removal of unaccompanied minors to any offshore location, under any regime, one that is highly problematic."
Prime Minister Julia Gillard says it is unclear whether the High Court decision on the Malaysian asylum seeker swap deal rules out any offs...
