Australia will pay Cambodia A$40m (£22m, $35m) over four years to take in transferred refugees, Immigration Minister Scott Morrison says.
Mr Morrison, who will sign the deal in Phnom Penh later today, said Australia would also pay resettlement costs.
The deal has drawn stringent criticism from rights groups, who say Cambodia is completely ill-equipped to take in and protect the refugees.
But Mr Morrison said it was a step towards achieving policy goals.
“It enables us to fulfil on the policy which says no-one will be resettled in Australia,” he said.
Australia has in recent months introduced controversial policies aimed at ending the flow of asylum boats from Indonesia.
The deal has sparked small protests in Sydney and Phnom Penh.
Mr Morrison told the Australian Broadcasting Corporation the A$40m would go towards various “development aid projects”, and the amount was on top of A$79m that Australia already gave in aid to Cambodia.
Read more: http://www.bbc.com/news/world-asia-29373198