Indonesia has set a deadline of a week for an Australian ship moored in its waters carrying 78 Sri Lankan asylum seekers to leave, a Foreign Ministry spokesman said on Friday.
The fate of the asylum seekers rescued by an Australian customs vessel nearly two weeks ago has piled political pressure on Australian Prime Minister Kevin Rudd, a year out from an election.
Australia insisted on Wednesday that the asylum seekers would not be taken to Australia. It has said there was an agreement with Jakarta for the Sri Lankans to go to Indonesia to be processed.
Indonesian Foreign Ministry spokesman Teuku Faizasyah said that the ship, the Oceanic Viking, moored close to Indonesia's Riau islands, would only be allowed to stay in Indonesian waters until Nov. 6.
"If by that date they cannot resolve the problem, then like it or not, it should leave our waters and those people should be taken to Australia," he added.
Indonesian Foreign Minister Marty Natalegawa told Reuters in an interview on Thursday that it was up to Australia to decide what to do with the ethnic Tamils from Sri Lanka.
A rise in boat people travelling through Indonesian waters in a bid to reach Australia has created a political headache for Rudd, whose government's policy of trying to get Jakarta to process the migrants in Indonesia appears to be in danger of unravelling.
Rudd has defended the so-called "Indonesian solution" of detention and processing asylum seekers in his northern neighbour on the basis it may prevent perilous sea journeys by boatpeople.
Rudd held talks with Indonesian President Susilo Bambang Yudhoyono last week about a pact to combat people trafficking, including more aid for Jakarta in return for interception in Indonesia of Australia-bound asylum boats.
But Indonesia is objecting to what it considers are expectations that it shoulder too much of the burden.
"We don't like the term "Indonesian solution". Why is it not called an "Australian solution?" Faizasyah said.
Australia receives just a fraction each year of what the United Nations estimates to be around 15.2 million refugees globally, but the issue cleaves voters between supporters and opponents of softer immigration laws.
Divisions over asylum seekers carried conservatives to an unexpected victory in 2001 when then prime minister John Howard sent commandos on to a Norwegian freighter at sea to stop 433 Afghans arriving in the country.
Howard went on to govern five more years and oversaw a controversial policy of sending asylum seekers into detention on small Pacific island countries during refugee processing, often for years.