Paul Toohey – Attempts by Julia Gillard to get moving on her proposed asylum-seeker processing centre in East Timor have come at a bad time for Prime Minister Xanana Gusmao, who is presiding over a shaky government and cannot afford unpopular distractions.

Timor's main opposition party, Fretilin, says it is prepared to fight a national election on a platform of opposing the asylum centre.

With more than 4900 detainees in Australia's immigration detention centres and residential facilities, the Gillard Government is desperately seeking new accommodation options for unauthorised arrivals.

Ms Gillard has said the East Timor centre would remain a priority, although the Government is also examining proposals to expand onshore detention centres.

It will be up to incoming Immigration Minister Chris Bowen and new Foreign Affairs Minister Kevin Rudd to renew approaches to Timor.

But the Australian Government will put itself in the difficult position of being seen as promoting a divisive issue in a foreign country in order to advance its own interests.

Fretilin MP Jose Teixeira said if Mr Gusmao supports the proposal, it will be his undoing in the elections. So far, Mr Gusmao said he would listen to any proposals put forward by Australia, and has asked President Jose Ramos-Horta to conduct any negotiations.

Mr Rudd has a good relationship with Mr Gusmao and Fretilin but will need to be especially mindful of Mr Gusmao's political troubles.

Mr Rudd's office said the Timor matter was delicate and he would be making no comment until after he was sworn in this afternoon.

Mr Gusmao presides over the Parliamentary Majority Alliance, or AMP, made up of four parties, who disagree on many issues but are committed to staying together to ensure political stability. But all are united with Fretilin in opposing the centre.

Deputy PM, veteran Timor politician Mario Carrascalao, a member of the ruling alliance's PSD party, resigned last week saying he'd been humiliated by Mr Gusmao, who called him stupid and a liar after Mr Carrascalao raised complaints about the Government's inability to deal with corruption.

Fretilin believes the ruling alliance is fracturing. It holds 34 seats while Fretilin, with the help of other opposition parties, can count on 28 seats. Mr Carrascalao's PSD party has six seats. If it were to abandon the alliance, a vote of no confidence would see Mr Gusmao lose power.

Timor watcher Prof Damien Kingsbury, from Deakin University, said the centre was very unpopular in Timor.