A Sri Lankan asylum seeker accused of aggravated indecent assault will remain in custody in Sydney until he makes a bail application next week.

It is alleged 21-year-old Daxchan Selvarajah broke into the room of a sleeping student at a Macquarie University student village, in the city's north, and assaulted her.

It is alleged the attack happened last Thursday.

Selvarajah was arrested at Central Station on Tuesday and today in Sydney's Central Local Court the matter was transferred to Parramatta.

He will appear via video link next Thursday.

After the attack it emerged more than 50 asylum seekers on bridging visas were being housed on the university campus after a deal was struck with the Red Cross.

The Department of Immigration has confirmed Selvarajah is in Australia on a bridging visa, but says he was not staying at the university.

However, the company that provides the university's student accommodation has hinted that it is considering scrapping its agreement with the Red Cross.

In a statement, Campus Living Villages says it intends to discuss the future of the program with the NGO and that it expects the influx of students by March will mean there are no remaining places for Red Cross clients.

It says the security and safety of residents at the facility is paramount.

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