Dili, East Timor – East Timor Prime Minister Xanana Gusmao said Thursday his government was open to discussing Australia's proposal to process Australia-bound asylum seekers in the impoverished nation.

New Australian Prime Minister Julia Gillard said Tuesday she had initial support from President Jose Ramos-Horta for the detention centre, in a pre-election bid to stem an influx of undocumented migrant boat arrivals.

Opposition to the plan has grown in East Timor, with Deputy Prime Minister Jose Luis Guterres saying the aid-dependent country is not ready or willing to house refugees, but Gusmao sounded a more positive note. "We are open-minded and open for discussion in participation to solve the problem," he told reporters.

"This is not only Australia's problem but also the region's problem. So the government cannot avoid this issue," he said, adding that his nation had a responsibility to help.

"We were refugees in other countries and also in our own country," he said of East Timor, which is still dependent on foreign aid more than a decade after its bloody vote to split from Indonesian rule.

Gillard, who unveiled the tough proposal this week as she builds towards elections to be held this year, vowed to press on with the plans and said she would hold talks with Gusmao in the coming days.

"This is something that we are going to get done," she told public broadcaster ABC late on Wednesday. "I have spoken to the president of East Timor. I've spoken today with the president of Indonesia.

"And I have tasked Australian officials to now move around the countries of our region working through the issues to create a regional processing centre."

Gillard has said that a regional processing centre would "wreck" the people-smuggling trade that brings dozens of boats to Australia's north each year.

Australia is a major donor of aid to East Timor and has about 400 troops there as the leader of an international force providing security for the fledgling country.