An alleged people smuggler accused of involvement in the deaths of more than 350 asylum seekers faces extradition to Australia after being arrested in Sweden.

Khaleed Shnayf Daoed was arrested by Swedish authorities following a request by Australia, which tracked him to Scandinavia, federal Justice Minister Chris Ellison said.

Australia will seek his extradition on people smuggling charges.

If returned to Australia and convicted, Daoed could spend up to 20 years in jail.

Daoed, an Iraqi, is alleged to have played a key role in organising the voyage of the ill-fated people smuggling boat dubbed Siev-X. The overloaded boat sank off Indonesia in October 2001, killing 353 Afghanis and Iraqis, including more than 100 children.

Daoed is suspected of being an accomplice of people smuggler Abu Quassey, whom Australian authorities have also been chasing.

Quassey was recently deported from Indonesia to Egypt.

"It is alleged that both men were involved in Siev-X, which resulted in the tragic loss of life of over 350 people," Senator Ellison said.

He said the government was committed to extraditing both men.

"We look forward to both Mr Abu Quassey and Mr Khaleed Daoed appearing in Australia before Australian courts to face Australian justice."

Australia has an extradition treaty with Sweden which enabled authorities to issue a provisional warrant for Daoed's arrest.

Senator Ellison was unsure how long extradition would take.

But he added: "We're issuing a formal request for extradition as we speak. And can I say, that we of course acknowledge Mr Daoed is subject to the laws of Sweden and the processes there."

Australian officials would not say where in Sweden Daoed was arrested for operational reasons.

A recent SBS radio documentary said Daoed had been granted refugee status in an unknown European country.

Meanwhile, Senator Ellison said Australia was still negotiating with authorities in Egypt to extradite Mr Quassey.

"If we can't secure his extradition to Australia, then we stand ready to assist the Egyptian authorities in any prosecution of Mr Abu Quassey."

The sinking of the Siev-X has led to accusations the Australian government may have been involved in sabotaging the vessel as part of a scheme to dissuade people smuggling.

Retired Australian diplomat Tony Kevin has investigated the issue and said in March that while he did not believe Australia was directly responsible for the incident, it may have contributed to it.

"Australia was running a people smuggling disruption program that may very well have generated a scenario in which Siev-X was sunk by some of the people the Australian Federal Police were working with," Mr Kevin told AAP.

The Howard government has denied any responsibility for the incident, claiming the boat sank in Indonesian waters outside Australian jurisdiction.

İAAP 2003