While the medivac bill comes as a win for doctors, detainees and social advocacy groups it comes as a blow to Prime Minister Scott Morrison who staunchly opposed the bill over fears it would re-energise people smuggling to the country.
Prime Minister Morrison warns that the new law will weaken the country's strict border policies.
"My job now is to do everything within my power, and in the power of the government, to ensure that what the parliament has done to weaken our borders does not result in boats coming to Australia".
The changes included a provision that only the 1,000 asylum seekers now held on Nauru and Papua New Guinea and not any future arrivals would be considered for medical evacuation under the new regime.
Kon Karapanagiotidis from the Asylum Seeker Resource Centre said the Government was trying to "whip up hysteria and fear-mongering", ignoring the fact the new laws applied only to the existing cohort of refugees.
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Jacinta Carroll, a former national security official who worked in border protection and is now based at the Australian National University, said people smugglers would likely use the change to market themselves but she doubted this would produce a flood.
Conditions in the Nauru and Manus camps had been called "inhuman" by the United Nations, and physicians had always been clamoring for the authority to bring the asylum seekers to Australia for medical treatment.
Preparations are now being made for up to 300 refugees and asylum seekers to come to Australia under the first wave of medical transfers.
The Christmas Island immigration detention camp, south of Jakarta, Indonesia, was a favorite target of people smugglers who brought asylum seekers from Asia, Africa, and the Middle East in rickety boats from Indonesian ports before the trade virtually stopped in recent years.
In the wake of the parliamentary setback, Morrison refused calls to step down or call an early election, insisting that Australians would have time to make their choice in May.
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"The government tells us that this bill is a constitutional crisis". The camp was shut last October after years of controversies and riots there.
The government said at the time the Christmas Island facilities would be "kept in a state of operational readiness" so that they could be reopened at short notice.
Christmas Island is part of Australia, so asylum seekers could be transferred to the facility and still kept far away from the mainland, despite Tuesday's bill passage.
The government, however, says asylum seekers on Manus and Nauru have adequate health care, with 60 medical staff employed on rotation on the islands.
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Kerryn Phelps, the independent MP who championed the bill and who previously served as President of the Australian Medical Association (AMA), described the vote as "such an important day for sick people needing medical care they are unable to receive".
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