CANBERRA - Australian federal government's unformalized deal to exchange asylum seekers with Malaysia is facing legal challenge, after lawyers on Thursday night launched a High Court action on behalf of a woman and her four-year-old son being held on Christmas Island.

Refugee lawyer David Manne lodged papers on behalf of a Kurdish mother and son, who have been told they will be processed in a third country.

The woman's husband has been granted refugee status in Australia. But the woman and her child arrived after the government announced no new arrivals would be processed in Australia and will be sent to a third country.

Manne said removing the woman and her child breaches Australian and international law, and has argued for family reunion under both international law and the Migration Act.

However, Immigration Minister Chris Bowen said he remains confident that the government's proposal to swap asylum seekers with Malaysia is legal.

"Of course there are several provisions in the Migration Act which would allow for the arrangements that we have entered into with Malaysia," he told ABC radio on Friday.

Bowen reiterated the government's position that blanket exemptions to the swap deal would be unworkable and counter- productive, because they would provide a loophole for people smugglers to exploit.

Manne said he hoped for a High Court hearing as early as next week.

The legal action comes on the day the Coalition and the Greens combined in Parliament to demand the deal with Malaysia be abandoned.

Seven weeks ago, Prime Minister Julia Gillard announced an agreement with Malaysia, with Malaysia to take 800 asylum seekers who arrive in Australia by boat, and for Australia to receive 4000 properly assessed refugees from Malaysian camps. Negotiations on the details are still under way.