Australia's Labor government is in turmoil after Prime Minister Julia Gillard heavily criticized a High Court ruling that disallows a refugee swap deal with Malaysia.

Gillard went on national television to claim the ruling "basically turns on its head the understanding of the (migration) law in this country."

The court's ruling was a "missed opportunity to send the strongest possible message to people smugglers (and to) asylum seekers not to risk their lives at sea."

Australian political analysts said Gillard's criticism of a senior judge was highly unusual and "extraordinary."

Gillard said Justice Robert French had, when he was on the lower Federal Court, looked at similar legal questions and "made different decisions to the one the High Court."

The ruling is likely the start of a "damaging fight among Labor MPs over asylum seeker policy and renewed questions about her leadership," the Melbourne Age newspaper said.

MPs critical of Gillard said there was a general level of despair, the Age reported. One critic said the High Court decision was a cathartic event that had reinforced concerns ''about the way we're going."

Another critic, a member of Parliament, said Gillard was ''unelectable'' and the party should decide her future for her. The member said the High Court had done what the caucus should have done in sinking the Malaysian solution.

This week's ruling comes on the heels of the court's ruling last month that put a temporary ban on sending the first batch of boat people asylum seekers to Malaysia under the controversial deal hammered out by the two governments.

The vast majority of the asylum seekers in Australia arrive in unseaworthy boats after a journey of thousands of miles and after paying human traffickers for the passage. Gillard had hopes that the deal with Malaysia would send a message to would-be asylum seekers that their voyage to Australia would be fruitless.

Last month Australia was to send the first group of what would be as many as 800 asylum seekers to Malaysia over the next four years. In return, Australia was to take 4,000 bona fide mostly Myanmar refugees from Malaysia.

Australia is wrestling with an annual influx of thousands of boat people. Australia's Department of Immigration said 134 boats carrying 6,535 people arrived in 2010.

Hundreds more have arrived this year, putting increasing pressure on detention centers where refugees are held pending verification of their status under U.N. rules.

Buts the temporary ban stopped the first group from being sent.

Also now in disarray is last month's agreement with Papua New Guinea, which said it is willing to reopen a refugee processing center for Australia.

Papua's Foreign Affairs and Immigration Minister Ano Pala said the agreement with Australia is part of his country's efforts with neighboring states to stop illegal immigration in South Asia.

"The government has made commitments to take co-operative action with Australia to enhance the region's response to irregular migration and to combat people smuggling," he said.

The Manus Center in PNG, operational from 2001-03, would be paid for by the Australian government.

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