"The problem is here and the problem is now people are dying in detention centres set up in Australia," she said.
"This is fairies at the bottom of the garden stuff; they are running around impoverished Pacific Islands asking them to take our problems."
Immigration agent Marion Le said it was clear East Timor wasn't interested in taking asylum-seekers trying to reach Australia.
"This has been dead in the water since the day Julia Gillard announced it. Of course the Department of Immigration has been taking it seriously, they have a section looking at it but nothing seems to be happening," she said.
Asked if any reference to the Timor centre would be included in today's official communique from Bali, one senior official told The Australian: "No."
The omission is a snub to Canberra, which had framed Bali as the venue for discussing the idea, launched in July last year by the Prime Minister in an attempt to suppress as an election issue the surge of boatpeople arrivals.
Pressed on Dili's likely refusal of the centre, Immigration Minister Chris Bowen dodged the issue, claiming that the proposed East Timor centre was never to be considered in Bali.
"We've been very consistent that this is about a framework, this is about an assessment centre," he said.
"But the location of an assessment centre is for bilateral discussion, not for discussion through the Bali meeting."
Foreign Affairs Minister Kevin Rudd also moved to manage expectations about the summit.
"There are no easy fixes in this business. We're working our way through each of the issues," he said.
In October, Mr Bowen said he would have a "concrete proposal" for a regional processing centre before the Bali meeting.
His statement echoed Mr Rudd, who in September told parliament the processing centre plan would "form the subject of discussions when the Bali Process meeting is held in the months ahead".
East Timorese President Jose Ramos-Horta continues to discuss aspects of the proposal with Australian officials, but the nation's powerful Prime Minister, Xanana Gusmao, has privately dismissed it.
It is understood Australian officials have started sounding out other governments in the region about whether they might host a centre.