Biloela’s Murugappan family may be released from detention on Christmas Island as soon as Tuesday, but it’s unclear exactly what the government will decide for its long-term future – whether permanent resettlement, or ongoing immigration limbo.

In a Tuesday morning update, Immigration minister Alex Hawke confirmed the family will be allowed into community detention in Perth, but noted his decision “does not create a pathway to a visa”. The family now seems unlikely to be allowed back to Biloela, and it’s unclear whether the community detention change will be permanent or temporary while young daughter Tharnicaa remains in a Perth hospital.

• Related: Muruguppan family to be released from Christmas Island, but no return to Biloela

It comes as further cracks tearing open in the Coalition, with a growing number of MPs urge the government to change course and allow the Tamil family to stay in Australia, while others remain adamant that would set a “precedent” for future refugee boat arrivals.

“This is exploitation and abuse of the kids. My heart bleeds for those poor bloody kids. They are the victims, but the lawyers are playing them as much as the parents,” claimed influential backbench Liberal MP Warren Entsch.

Earlier on Tuesday, treasurer Josh Frydenberg said the Murugappan family – Nades, Priya, and young daughters Kopika and Tharnicaa – would soon be reunited in Perth.

“That will happen very soon and the minister will make a statement today,” he told the Today show.

But despite numerous questions, Mr Frydenberg could not confirm whether their Perth move would be permanent or temporary.

Tharnicaa and Priya are currently in a Perth hospital, having been medically evacuated after the young girl fell seriously ill on Christmas Island.

Kopika and Tharnicaa were born in Australia.

Senior government sources had told The New Daily on Monday that a “positive outcome” was “likely”, in relation to the family’s removal from detention.

It comes after numerous Coalition MPs including Barnaby Joyce, Katie Allen, Trent Zimmerman and Ken O’Dowd called for the family to be allowed to return to Biloela.

In Britain for the G7 conference, Prime Minister Scott Morrison said the government was considering “other options”, which he said would be “consistent with the government’s policy” on boat arrivals as well as “appropriate humanitarian and health support”.

He noted permanent resettlement “is not the government’s policy”, but did not rule out options like temporary protection visas.

Government defends ‘compassionate’ Biloela response

The family has been in immigration detention since 2018, after the parents were found by numerous government and court processes to not be refugees.

The daughters, aged four and six, were born in Australia.

Acting Prime Minister Michael McCormack said on Monday morning the family “are being reunited in Perth as we speak”.

However, family spokespeople told TND neither they, nor Priya or Nades, had been informed of any decision as of Monday evening.

TND contacted the Department of Home Affairs for comment on the family’s potential reunification in Perth, but did not receive a response.

“These are difficult circumstances,” said Mr McCormack, acting in the top job while Mr Morrison is in Europe.

“We are all compassionate.”

Mr McCormack noted the government’s “clear and steadfast policy” on asylum seekers who arrived in Australia by boat was they wouldn’t be resettled here permanently.

“That’s why we stopped the boats. That’s why we actually saved so many people’s lives from not making that risky voyage,” he said.

Although several moderate Liberals have called for the Murugappan family to be allowed to return to Biloela, several Queensland-based members of the Coalition have spoken out against it.

Senator Gerard Rennick told TND that changing tack would encourage “anchor” babies in immigration detention, and suggested the family return to Sri Lanka then apply for Australian residency through proper channels.

Mr Entsch went further, saying he understood why some of his southern state colleagues had backed the family’s release, but he believed it would encourage the restart of people smuggling boats.

Instead, he suggested the family should return to Sri Lanka, whereupon he pledged to write them a “letter of support” backing any visa application they make through formal processes.

Mr Entsch said he believed lawyers were “grooming” the family and using them “as pawns”.

“There’s a lot in this for lawyers. They know if there’s precedent, they can do it for thousands of people, and have an income for life,” he told TND.

“If [the family] respected the law, they’d be repatriated back, get normalised and apply for another Sri Lankan passport.

“They’ve got Australian-born kids. They can put in an application to come to Australia. They’ll have no trouble finding a community like Biloela to sponsor them, and come over through normal processes.

“Warren Entsch will be the first one to write a letter in support. The only victims here are the children. I’d love to have them back, and here’s a way of doing it without creating precedent.”

Spokespeople for the Murugappan family believe Priya and Nades would be arrested if they return to Sri Lanka.

Mr Entsch said he meant “no disrespect” to his colleagues, but feared the possibility of people-smuggling ventures restarting, if the government relents on its hardline stance against resettlement for boat arrivals.

“I’m getting a hell of a lot of lobbying of my office, demanding we change our view and threatening to vote against me. I understand where my colleagues are coming from, but I’ll be interested to see their position when lawyers start recruiting thousands of people to apply after a precedent set by this family,” he said.

“I’d be interested to see how they react, like we did in the days of Howard and Gillard, when we had to step up to stop the illegal trade.”