Matt Brown – More cold water has been poured on plans to establish an asylum seeker processing centre in East Timor, with the UN refugee agency saying the country has not approached it about the idea.

The Federal Government says Julia Gillard's plan for a processing centre on East Timor has received a boost after a people-smuggling conference in Bali this week reached a regional cooperation agreement.

The deal did mention a possible centre or centres, but the UN High Commissioner for Refugees says the chances of building a processing centre like the one the Government wants is unlikely.

Eight months after the policy was announced, UNHCR assistant commissioner Erika Feller says the proposal has not been explored with East Timor. "I don't know [whether] East Timor is keen on or not, because we haven't actually spoken with East Timor about that," she told the ABC.

Before the election last year, Ms Gillard said the East Timor centre would undermine people smugglers because it would ensure "a boat ride to Australia would just be a ticket back to the regional processing centre".

But the UNHCR says if a centre is ever built, it is unlikely to be used to process everyone who arrives by boat at Christmas Island.

"I think there could be a centre that would assist a particular government – be it Indonesia, be it Malaysia, be it Thailand, be it Australia – to deal with... some growing problem, some particular pressure," Ms Feller said. "But I don't think it would regularise the handling of asylum claims."

The Government says it would need the support of the UNHCR to make its Timor processing centre a success.

While East Timor says it is not interested in the plan, Ms Gillard insists she will continue negotiations. However Ms Feller, who attended the Bali conference, says the agreement to develop a common system to deal with asylum seekers was "very significant".

"It is the first time that we've had a common framework that could regulate things in this region," she said. "It will help us tremendously to build asylum capacity. We are very pleased."

Ms Feller says having a common system in the region could also dissuade asylum seekers from heading for Australia.

"If people are bent on doing it then they try it anyway but if they get better opportunities or at least if they get some opportunities somewhere else en route, I think it will have an impact," she said. "It could cut numbers."