It is the first time in decades that an Australian government has lost a vote on a substantive piece of legislation, sparking applause and cheers from observers in the parliamentary viewing gallery in Canberra.
The asylum seeker's case, which will go before a Sydney court this week, comes as independent Wentworth MP Kerryn Phelps battles to get her medivac bill passed in Canberra.
The amended bill, which passed into law in the Senate shortly after Morrison's announcement, hands doctors on Nauru and Manus Island greater power to transfer asylum seekers to Australian medical facilities.
Labor has handed the Coalition a campaign gift, and the Liberal Party will be quickly dusting off their tried and tested campaign material on boat arrivals and erecting billboards in marginal seats across the country.
"It's a historic moment for all of the refugees on Manus and Nauru", Boochani added.More news: BET apologises for tweet insulting Nicki Minaj
The push to speed up medical evacuations was first made by independent MP Kerryn Phelps past year after she won the Liberal Party stronghold of Wentworth when former PM Malcolm Turnbull was ousted in a party coup.
Prime Minister Scott Morrison has announced the detention centre would be reopened as part of "a range of strengthening" of Operation Sovereign Borders, arguing the new legislation will undermine border protection policies and could restart the people smuggling trade.
"Last night was not about an election - last night was about the simple proposition that Australia is strong enough to treat people humanely", he told reporters at Parliament House.
"Today Labor will fight for more jail time and increased penalties for banks and bankers who do the wrong thing", Opposition Leader Bill Shorten said.
A fishing boat carrying Vietnamese asylum seekers neared the shore of Australia's Christmas Island, taken in 1993.More news: The Division 2 Open Beta Confirmed Via Twitch Livestream
He also pledged to reverse the legislation if he won the next election and had a majority.
The move cut short a furious debate over whether the vote in the lower house could be seen as a vote on a money bill and was therefore a vote of no confidence in the government itself.
The amendments to the bill were introduced in Parliament back in December. People have died as a result.
The changes included a provision that only the 1,000 asylum seekers now held on Nauru and Papua New Guinea and not any future arrivals would be considered for medical evacuation under the new regime.
This change is meant to protect refugees who need medical help but might have been convicted of minor offences or perhaps crimes of freedom of expression in their home countries.More news: Schmidt confident Johnny Sexton will recover for Italy