Green MP and advocate for refugees' rights Keith Locke has welcomed Prime Minister John Key's indication New Zealand may take refugees Australia intends to ship to Malaysia under a controversial plan.

Australia plans to ship boat people who arrive on its shores to Malaysia as it seeks to crack down on people smuggling.

However, the transfer of the first group of 800 mostly Afghan refugees has been held up as lawyers representing them challenge Australia's right to do that. An Australian High Court decision on the matter is now expected in a week's time.

Mr Key said yesterday that New Zealand would consider taking some of Australia's refugees via Malaysia. "It's possible. We'll have a discussion about changing where we take our refugees from, not all but some of them, but we haven't those discussions yet."

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Mr Locke whose party supports New Zealand raising the number of UN certified asylum seekers it accepts each year from 750 to 1000 was pleased Mr Key was open to taking some of the refugees many of whom are currently living in crowded conditions on Christmas Island.

"I have long been supportive of New Zealand helping out Australia and taking some of the boatpeople who end up there.''

Mr Locke said the plan appealed to him because it may be a way for Sri Lankan refugees, who often did not get the opportunity to be considered for relocation in New Zealand to get that chance.

However human rights groups in Australia argue the Malaysia plan is inhumane because that country is not a signatory to the United Nations convention on refugees and that Australia is not meeting its own obligations to asylum seekers.

Mr Key yesterday aid any refugees New Zealand accepted would have to be "UN certified" and would form part of the 750 a year quota.

While Malaysia was not part of the UNHCR programme, Mr Key was "not closed minded to at least having a discussion with the Australians and others about whether we might take some that are closer to home from refugee camps".

"They'd need to meet all of the criteria and we'd need to have a discussion with the UN about that. That's been a slow process we haven't had those discussions yet."

In 2001 New Zealand took 150 refugees who were among a group of 434 asylum seekers rescued from a sinking boat by the Norwegian container ship Tampa. They were initially sent to Nauru, sparking a diplomatic and domestic political crisis as Australia's actions were criticised as being contrary to the spirit of what the UN stood for on refugees.

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Meanwhile, Mr Key yesterday also confirmed New Zealand would likely recognise a regime established by rebel forces in Libya and would offer financial support.

Mr Key said the rebels had declared themselves willing to ensure there were free elections in Libya, freedom of the press and that human rights would be respected.

New Zealand's Ambassador in Cairo was ready to travel to Benghazi to recognise the rebels as Libya's legitimate opposition and possibly its new government.

New Zealand was unlikely to send peacekeepers to the North African country, which has been ruled by dictator Colonel Muammar Gaddafi since 1969, but would send financial aid and humanitarian support.

That would be "proportionate and reasonable" and in the same ball park as the approximately $2 million a year New Zealand previously gave. It would be targeted at helping to restore basic services, to improve healthcare and to supply food.