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The revelation that Australia paid thousands of dollars to force people-smugglers to turn back boats carrying migrants has sparked an international outrage.

Last week, Indonesia arrested a boat captain and two crew members on suspicion of human trafficking. During the interrogation, the traffickers reportedly told the Indonesian police that they were paid US$ 5,000 (Aus $ 6450) to turn back their vessel with 65 migrants on board.

According to Reuters, Australian navy 'paid-off' the human traffickers to turn the boat, which was carrying 65 children and a pregnant woman from Bangladesh, Sri Lanka and Myanmar.

The Guardian report citing Indonesian foreign ministry spokesman noted that the charges, if proved true, would be a 'new low' for Australia.

"Should this situation be confirmed and it turns out to be true, it would be a new low for the way the government of Australia handles the situation on irregular migration," Indonesian foreign ministry spokesman Armanatha Nasir told The Guardian.

Since the revelations, there has been a growing call for an inquiry into the allegations. Australia till now has neither confirmed nor denied the claims.

Australian Broadcasting Corporation, or ABC News, reported on Monday that Prime Minister Tony Abbott has declined Indonesia's request for a response.

"There's really only one thing to say here and that is that we have stopped the boats.That's good for Australia, it's good for Indonesia and it's particularly good for all of those who want to see a better world," Abbott told ABC News.

The United Nations also came down heavily on Australia over the charges that the country "bribed" people-smugglers. United Nations High Commissioner for Refugees (UNHCR) Antonio Guterres told BBC that by paying money to people smugglers Australia 'rewarded' the criminal behaviour, which was unacceptable.

"We need to crack down on smuggling and trafficking, not paying them, but putting them in jail whenever possible, or prosecuting them. But at the same time protecting the victims, and with each country assuming also its responsibilities in relation to the protection of refugees," he told the BBC.

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