Papua New Guinea is set to create a new class of visa to allow refugees to live in the country.

The new classification is a result of a deal signed by both PNG and the island of Nauru, which will see the resettlement on the island of refugees attempting to come by boat to Australia.

The plan faced ridicule after it was revealed neither Nauru nor PNG had proper visa stipulations in place, but reports now say a deal has been struck including legislative guarantees and refugees will stay there.

PNG's foreign minister, Rimbink Pato said: “Once they are determined under PNG law that they are genuine refugees then there will be legislation passed, which will ensure that they are recognised or they're given a different class of visa under our law... so I can say to you that the process and the terms are well and truly working.”

The PNG government has signed the Memorandum of Understanding with Australia to formalise the deal late yesterday, with Immigration Minister Tony Burke in Port Moresby as a witness.