Australian taxpayers will be slugged $2.5 billion over 30 years to deport hundreds of former immigration detainees to Nauru under a "secret" deal.

The Albanese government signed a memorandum of understanding with Nauru, offering more than $400 million upfront and then $70 million each year.

The agreement will allow Australia to transfer up to 354 former detainees, including convicted criminals, to the tiny Pacific island which has a population of about 12,000.

Immigration officials were grilled during a late-night parliamentary inquiry on Wednesday, reluctantly confirming the massive cost of the deal.

Australia could stop paying the annual $70 million sum if Nauru decided it would not accept any more people under the agreement.

Under questioning by Greens senator David Shoebridge, off

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