The New Zealand government is under fire from all sides for agreeing to take 150 refugees from Australian detention centres each year.
New Zealand Prime Minister John Key announced the deal with Prime Minister Julia Gillard following bilateral talks in Queenstown over the weekend.
It will see New Zealand resettle 150 former asylum seekers, potentially from Australia's offshore detention centres in Nauru and Manus Island, from 2014.
The refugees will form part of New Zealand's annual 750-refugee quota.
Immigration consultant and former National Party immigration minister Aussie Malcolm told Radio New Zealand the deal is a "tragedy", with New Zealand ignoring world best practice on refugees and essentially supporting Australia's claims about mass detention and "queue-jumpers".
Instead, he says, New Zealand should be showing leadership and working with Malaysia, Thailand and Indonesia to ensure they deal with refugees properly.
Race Relations Commissioner Joris de Bres says it would have been more meaningful if New Zealand took refugees from Australia over and above the existing quota.
"Anything that can be done to relieve the situation of the people in the offshore Australian detention camps has to be a good thing, but to do it at the cost of other refugees coming here seems a little unfair," he told Radio New Zealand.
Mr de Bres also warned New Zealand was likely to be breaching as international convention on refugees if the government proceeds with legislation to detain a mass arrival - of 10 or more - of asylum seekers who arrive in New Zealand by boat.
Labour's Darien Fenton is hopeful the new deal means the government has had a change of heart on the mass detention law, adding that it must be prepared to back the cash-strapped refugee organisations tasked with helping settle new refugees.
Amnesty International has also criticised the deal, telling 3News it will not protect the needs of refugees, who will spend years in Australian detention centres awaiting resettlement.