Migrants on a boat headed for Australia have told the UN that the crew was paid by the Australian navy to turn back.
James Lynch, a spokesman for the UN refugee agency (UNHCR), told the BBC that passengers saw smugglers being paid after the boat was intercepted.
Australian Prime Minister Tony Abbott on Friday admitted using "creative" strategies to stop migrant boats but refused to go into detail.
The country's immigration and foreign ministers denied payments were made.
"The boat that was rescued by the Indonesian navy on 31 May - we have interviewed the 65 passengers and they have said that the crew received a payment," said Mr Lynch.
He said the passengers - 54 from Sri Lanka, 10 from Bangladesh, and one from Myanmar - were transferred to a customs boat for four days "before being put on two boats and sent back to Indonesia".
He added: "Mr Abbott says the reason is to save lives because people risk their lives on the boats, and I agree, but I'm not sure putting them back on boats and sending them back is the answer."
Mr Lynch said Australia had a responsibility under UN treaties, which it had signed, to see if any of the migrants were in need of international protection.
He accused Australia of "sending the wrong signal" to other countries in the region - including Myanmar, Indonesia, Malaysia and Thailand - which the UN is trying to persuade to allow migrants to disembark.
Indonesia's foreign ministry said it was "very concerned" about the alleged payment.
The Indonesian navy said it intercepted the boats on their return and arrested the crew, who said they had each been paid A$5,000 ($3,900; £2,500) to turn back.
Local police chief Hidayat told AFP news agency: "I saw the money with my own eyes."
Speaking to Radio 3AW on Friday morning, Mr Abbott refused to deny that a payment had been made, saying simply that "creative strategies" had been developed to stop the migrant boats.
"We have stopped the trade and we will do what we have to do to ensure that it stays stopped," he said.
Under Australia's controversial policies, no migrants and asylum seekers are allowed to reach its territories by boat.
They are instead intercepted at sea and turned back or taken to detention facilities on the island nation of Nauru and on Manus Island in Papua New Guinea.
- Australia and asylum
Asylum seekers - mainly from Afghanistan, Sri Lanka, Iraq and Iran - travel to Australia's Christmas Island by boat from Indonesia
- The number of boats rose sharply in 2012 and early 2013. Scores of people have died making the journey
- To stop the influx, the government has adopted hard-line measures intended as a deterrent
- Everyone who arrives is detained. Under a new policy, they are processed in Nauru and Papua New Guinea. Those found to be refugees will be resettled in PNG, Nauru or Cambodia
- Tony Abbott's government has also adopted a policy of tow-backs, or turning boats around
- Rights groups and the UN have voiced serious concerns about the policies and accuse Australia of shirking international obligations
Credit: The BBC