Nauru detention centre descended into chaos on Friday, with riots breaking out, and reports of multiple explosions, the centre being set on fire and a policeman being stabbed by asylum seekers.

Between 150 and 200 detainees were involved in the fracas, and many have breached the fence, according to a spokeswoman for the Department of Immigration and Citizenship.

According to an eye-witness report from Nauru, the riot was sparked by erroneous rumours - before Prime Minister Kevin Rudd's announcement on Friday afternoon that all asylum seekers bound for Australia will now be sent to Papua New Guinea for processsing and resettlement - that the Manus Island had been closed.

"At the moment, most parts of the island are on lock down," the source - who asked not to be named - reported.

"The detention center is on fire. The mess, the accommodation area, the kitchen and the newly-built recreation area have been set on fire. The detainees have been pelting the police and security guards with rocks and sticks. There have been at least 5 explosions, reportedly from cars set on fire.

"Reportedly, one police officer has been stabbed and is being held by the detainees. Hundreds of local Nauruans have rushed to the detention center to help the police. At least a dozen detainees have been injured, many rushed to the hospital."

The riots began at 3pm, with asylum seekers staging a protest. Authorities evacuated the centre at 4pm, according to local reports. It's understood those involved are mostly Sri Lankan Tamils.

Local reports say most parts of the island are on lock down and staff have been instructed to stay indoors until further instruction.

According to a written order obtained by Fairfax Media, Nauru's acting police minister David Adeang has deputised a new "Nauru Police Force Reserve" to respond to the riots.

The force includes contracters from Australian company Transfield as well as "all others deputised to respond".

Women and children on Nauru have been instructed by the government to lock their doors and stay inside until further instruction. All men have been told to present to the centre to be deputised as security guards. There were reports up to 200 people have become involved in the riots.

At 7pm, Nauru man Clint Deidenang reported that the situation had calmed.

- More to come