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Philippines president Benigno Aquino has rejected Australia's request to permanently relocate refugees to his island nation in a rebuke to Canberra's push for a regional solution to off-load people from Manus Island.
Mr Aquino told reporters his country has "no capacity" to resettle refugees or asylum seekers from Australia, adding his government was "challenged to meet the needs of its own people right now." 
Australia had reportedly offered $150 million over five years in exchange for the relocation of an unknown number of refugees to the Philippines.
Under the plan, Australia would have been sending unwanted refugees to resettle in one of Asia's poorest nations with one of the world's highest rates of crime.
Mr Aquino's rebuff to Australia came as Australia's controversial US$55 million agreement to send refugees to Cambodia has faltered after hundreds of refugees on the Pacific island of Nauru refused to accept offers of housing, training and other benefits to give up their hopes of reaching Australia.
Only four refugees have agreed to go to Cambodia from Nauru and one of them quit the country and returned home to Myanmar this month.
Mr Aquino said the Philippines would still consider taking refugees from Australia but only if they do not resettle permanently in the country.
"If this proposed agreement???is not one of just being in a transit point but actually relocating these people we think we are not in a capacity at this point in time to afford a permanent residency to these people," he said.
"I think Australia can recognise that we do have a significantly bigger population than they do???we would want to assist but there are limitations as to how far we can assist."
Australia has not disclosed details of its proposal but is believed to be aimed at refugees having to live permanently in the Philippines without the possibility of being relocated to a third nation.
Mr Aquino said the Philippines agreed to host Indochinese refugees after the Vietnam war in the 1970s with the understanding that the country would only be a transit point.
But he said the Philippines was swamped with hundreds of thousands of refugees who stayed for up to 15 years.
Australia's Minister for Immigration Peter Dutton told reporters in early   October that high-level talks on the plan had been underway with the Philippines for months.
Australia has been pressing for several years for a regional solution to help solve its festering problem of off-shore detention, without appearing to waiver on its tough border protection stance.
The Philippines confirmed that foreign minister Julie Bishop had met her Philippine counterpart Albert del Rosario on the sidelines of UN meetings and discussed "irregular migration and migrants in distress," among other issues.
Australian officials were hopeful that a deal could be reached with the Philippines as part of a strategic partnership agreement and a strengthening of co-operation between the armed forces of the two countries.
The Philippines is one of the few Asian nations that have signed the 1951 Refugee Convention.
Some refugee advocates in Australia said sending refugees to the Philippines was a better solution than them being kept on Manus in Papua New Guinea.
But human rights groups and Australian Greens senator Sarah Hanson-Young criticised the plan, saying Australia was once again passing its responsibility to care for refugees on to another poor nation.
More than 27 percent of Filipinos live in poverty on incomes of less than $AUD504 a year.
Renato Reyes from the left-wing Philippine group Bayan said it was "shameful" for a wealthy nation like Australia to refuse refugees and instead push to relocate them in a developing country like the Philippines.
Analysts said reaching an agreement with the Philippines in a politically charged environment ahead of elections across the Philippines in   May was fraught with difficulty.
Mr Aquino was being asked to approve the deal while serving in his last months in office.