The interception by the Sri Lankan navy of a group of asylum-seekers bound for Australia has heightened concerns that Indonesia's plans to relax its visa restrictions could lead to a sharp spike in the number of boat-people attempting the hazardous journey.

Last Friday, a group of 22 Sri Lankan asylum-seekers preparing to travel to Australia via Indonesia was intercepted by the Sri Lankan navy before they left the port city of Tangalle.

The group's thwarted bid came just days after Indonesia announced plans to relax visa restrictions on citizens from several countries, including Sri Lanka.

The number of Sri Lankan asylum-seekers arriving in Australia has declined over the past year, but in announcing an easing of the visa requirements last week, Indonesia's director-general of immigration with the Law and Human Rights Ministry, Bambang Irawan, conceded the new plan could lead to a surge in asylum-seeker traffic to Australia.

Last night, a spokeswoman for the Gillard government said Australia was engaged in discussions with Indonesian authorities about the planned changes to the country's visa requirements.

"Australia and Indonesia are committed to working together and with other source, transit and destination countries to develop regional solutions," the spokeswoman said.

"The government will continue to monitor the visa arrangements and their impact, and will work with Indonesia to address any issues that arise."

While the federal government has so far refused to speculate directly on Indonesian policy, Tony Abbott last week expressed his concern about the mooted changes to the visa requirements and the consequences for Australia. "Obviously, nearly all of the boats come from Indonesia and if potential boat arrivals can more easily enter Indonesia, there is potential for a problem."

"I don't believe that now is the time to be critical of Indonesia. It is the Australian government which has really fallen down on the job here," the Opposition Leader said.

In December, Immigration Minister Chris Bowen and Foreign Minister Kevin Rudd sat down with their counterparts Scott Morrison and Julie Bishop in a bid to reach a compromise on offshore processing policy. Those discussions are said to be "ongoing".

The interception of the Sri Lankan vessel and the arrival of three asylum-seeker boats in the first week of this year has accentuated the urgency of the issue.

On Saturday, a boat carrying 119 suspected asylum-seekers and two crew was intercepted off the West Australian coast.

Opposition border protection spokesman Michael Keenan said the third arrival in a week was evidence the people-smuggler trade was not slowing. "Labour must show some resolve, end their arms-wide-open policy and stop encouraging people-smugglers by taking away the product they have to sell," Mr. Keenan said. (Source: The Australian)