THE government has all but abandoned hope of sending asylum seekers offshore and is making preparations for an expected surge of arrivals, including letting more people into the community and granting them limited work rights.

The decision was announced last night after a day of crisis meetings which tested the authority of the Prime Minister, Julia Gillard, strained the backbench and took the shine off the policy victory of the day before when the carbon price legislation passed the lower house.

Blame game ... Julia Gillard at the news conference in Canberra. Credit:Andrew Meares

After the Nationals MP Tony Crook said he would not support changes to the Migration Act, the government announced that it had little choice but to embrace onshore processing. This was despite knowing for weeks it had no choice because the legislation was never going to pass the Senate.

Ms Gillard and the Immigration Minister, Chris Bowen, said the government would retain the Malaysia plan as policy and in the meantime blame Tony Abbott for what they said was an anticipated surge in arrivals.