Cambodia will accept refugees seeking asylum in Australia in return for A$40 million ($35 million) in aid, under a controversial, open-ended deal that has been criticized as "a new low" in Australia's treatment of asylum seekers.

Australia's Immigration Minister Scott Morrison was in Phnom Penh Friday to sign the agreement, as protesters there demonstrated outside the Australian Embassy.

"Cambodia is poor... can't help the refugees from Australia," read one placard.

Before his departure, Morrison told Australian public broadcaster ABC that the deal would initially apply to refugees being held on Australia's offshore detention center on Nauru, more than 200 of whom had been granted refugee status.

Instead of finding refuge in their target destination, asylum seekers who agreed to the terms would instead be settled in Cambodia, one of southeast Asia's poorest nations.

It would be "an ongoing arrangement" with no caps on total numbers involved, said Morrison.

"This is a voluntary arrangement. No-one is forcing anyone to go anywhere," he said during the interview.

"It enables us to fulfill on the policy which says no one will be resettled in Australia."

Australia's government was elected a year ago partly on a pledge to halt the flow of asylum seekers arriving by boat.

Morrison said Australia would provide A$40 million ($35 million) in development aid projects over four years as part of the deal, in addition to the $79 million ($69 million) already allocated to Cambodia.

Australia would also provide expertise on developing Cambodia's capacity to settle refugees, he said.

(CNN)