A demonstrator holds a placard outside the venue of the signing ceremony between Malaysia and Australia to swap refugees, in Kuala Lumpur July 25, 2011. [Photo/Agencies]

KUALA LUMPUR - Malaysia and Australia sealed a pact Monday to swap refugees in a contentious new strategy aimed at deterring asylum seekers from undertaking perilous boat journeys to Australia.

The deal will see Australia send 800 asylum seekers to Malaysia over the next four years in exchange for Australia resettling 4,000 registered refugees currently languishing in this Southeast Asian nation.

Both governments announced the deal in May but were forced to fine-tune it amid objections by opposition politicians in their countries and human rights groups that criticize the treatment of about 93,000 refugees now living in Malaysia, which has not signed the UN Convention on Refugees.

Malaysian Home Minister Hishammuddin Hussein and Australian Immigration Minister Chris Bowen signed the agreement at a Kuala Lumpur hotel, where about 15 opposition-backed activists gathered to protest the plan.

Bowen called it a "bold and cutting-edge deal," adding that the 800 asylum seekers sent by Australia will be allowed to legally work in Malaysia and have access to education and health care, unlike the refugees already here.

"It's a win for Australia. It's a win for Malaysia. It's a loss for people smugglers," Bowen said. Only asylum seekers who reach Australia starting this week will be sent to Malaysia.

Australian Prime Minister Julia Gillard's administration has said the deal sends a message to potential asylum seekers that it will not accept them if they reach Australia by paying smugglers to ferry them.

Australia has long drawn people from poor, often war-ravaged places hoping to start a new life, with more than 6,200 asylum seekers arriving by boat last year. Most are from Afghanistan, Sri Lanka, Iran and Iraq, and use Malaysia or Indonesia as a transit point for traveling to Australia.

Hishammuddin pledged that asylum seekers sent to Malaysia would be treated according to the UN refugee agency's international standards. They will be placed at a processing center for six weeks before being allowed to live in public.

"The allegation that Malaysia is not fair toward refugees in this country is completely untrue," Hishammuddin said.

Activists who protested Monday's signing ceremony, including one opposition member of Parliament, held posters that read "Shame on you, Gillard and Bowen" and "Welcome to Malaysia: One of the worst places for refugees."

Malaysian rights group Suaram said refugees in Malaysia are "not respected by the authorities."

"Crackdowns by the government have seen refugees arrested and sent to detention, even those holding (UN agency) cards," Suaram said in a statement. Detainees "are subject to humiliation, physical abuse, theft and extortion."

Australia says it will pay the full cost of the swap deal, estimated at 292 million Australian dollars ($316 million).

Australia faces frequent protests at its overcrowded Christmas Island center, where it processes asylum seekers. Last week, police fired tear gas and shock grenades to quell a riot by inmates who started fires.