East Timor's Deputy Prime Minister, Jose Luis Guterres, has rejected Australia's proposal to build a refugee processing centre on Timor's soil.
The Australian Government insists talks about the proposal are continuing with the highest levels of East Timor's Government.
However, during a visit to Darwin on Wednesday, Mr Guterres said no agreement had been reached.
"Unhappily there is no agreement but as friends we have to accept that we don't always agree on everything," he said.
Mr Guterres says the processing centre won't go ahead in East Timor because the country's parliament has voted against it.
"Our parliament unanimously said no to this proposal."
He says church groups and civil society have also expressed opposition to the centre.
Mr Guterres says his nation wants to support multilateral efforts to stop people smuggling.
This includes providing financial asssistance to build a processing centre in a more suitable country.
He says Australia is aware of East Timor's position.