This worry about the Pacific is contained in once-secret cabinet papers from 2003 that have been released by the National Archives of Australia.

The papers revealed cabinet was briefed on the growing terrorism threat following the 9/11 attacks, along with increasing international anti-American sentiment.

While 2003 would be heavily focused on terrorism threats in the Middle East, including Iraq, the cabinet papers showed concern with the security situation closer to home.

"There is reason for concern about instability in Australia's immediate region, including the South Pacific states, Papua New Guinea and East Timor," the cabinet papers said.

One cabinet submission from then-immigration minister Philip Ruddock and then-foreign minister Alexander Downer expressed concern a potential decline in foreign aid to Nauru could threaten the operation of Australia's processing centre for asylum seekers.

Under the Howard government's Pacific Solution, set up following the Tampa crisis in 2001, asylum seekers were sent to Manus Island in Papua New Guinea and Nauru while their case was reviewed.

Cabinet sought to extend arrangements with Nauru to keep the processing centre operational, but indicated regional assistance was needed.

"Any quick and dramatic decline in aid from current levels will add to instability, increasing the chance of collapse and threatening the operation of the processing centres," the submission said.

The cabinet submission said processing centres were needed on Nauru because a permanent detention centre on Christmas Island was not being fully built.

Cabinet agreed to downsize the Christmas Island facility from 1200 people to 800 detainees.

"A continued presence in Nauru is important for the offshore processing strategy of unauthorised arrivals, but building a purpose-designed and built facility in Nauru is not desirable due to the logistic problems and significant cost penalties," the documents said.

Cabinet submissions said a purpose-built site at Christmas Island was needed to avoid criticism of a "Woomera-like" facility.

A withdrawal of Australian peacekeeping forces from Bougainvile in Papua New Guinea was also among the items discussed in cabinet.

Peacekeepers had been in the region since the 1990s when a civil war broke out between the Papua New Guinea government and separatist groups.

Cabinet noted while peacekeepers were closer to an "end game" for the region, "the situation remains fragile and the peace process is vulnerable, particularly until such time as weapons are secured".

Talks were held on whether peacekeepers would be able to succeed in the region without the participation of Australian troops.

It was later agreed that a small unarmed civilian force would replace peacekeeping forces.

Australian Associated Press