CANBERRA - Australians are losing faith in the ability of Prime Minister Kevin Rudd to shut off the flow of refugee boats from Indonesia, an issue that in the past helped keep Labor out of power.

Although still in an overwhelmingly dominant position over a moribund Opposition, the Government is facing an increasingly serious political problem from the steady rise in the number of asylum seekers risking their lives in the Indian Ocean for a new life in Australia.

Two new polls yesterday showed that despite the relatively small numbers of people making the dangerous voyage, perceptions of collapsing border security are beginning to erode Labor's position.

Foreign Minister Stephen Smith was in Sri Lanka yesterday to seek means of stemming the increasing numbers of Tamils slipping into Indonesia to board boats bound for Australia.

And at the western Java port of Merak, hopes were growing of a deal to end a three-week standoff aboard the Australian Customs patrol ship Oceanic Viking, where 78 Sri Lankans are refusing to disembark after being picked up in Indonesian waters.

Reports indicated yesterday that the deal could include rapid processing of claims for asylum, and fast-tracked resettlement in countries that could include New Zealand. Indonesia has set a Friday deadline for the departure of the Oceanic Viking.

In 2001 New Zealand accepted some of the refugees rescued by the Norwegian ship Tampa as part of a deal that helped end an earlier diplomatic crisis faced by former conservative Prime Minister John Howard.

That crisis, sparked by the arrival of the Tampa off Christmas Island, despite being ordered not to enter Australian waters, hammered home the political significance of boat people.

The ship was stormed by the SAS and its 438 asylum seekers transferred by Australian Navy vessels to Nauru which, with Papua New Guinea, became Howard's "Pacific solution" by denying access to Australian territory and its legal system.

Howard also "excised" Christmas Island and many other offshore islands to broaden the legal moat around the nation's refugee appeal rights.

The Tampa affair came at a key point in Howard's re-election campaign, swinging opinion polls away from Labor and helping keep the Coalition in power.

Rudd is now facing deepening voter criticism of his handling of asylum seekers, and a sustained political barrage linking a softening of some of Howard's more draconian rules to a resurgence of refugee boats over the past year. The Government has maintained - and even extended - most of Howard's border control measures, increasing naval and other patrols, with a similar hardline approach that has retained the excised islands.

But voters remain unconvinced.