They were eventually brought to the Australian mainland so they could be interviewed by Indian consular officials with a view to returning them to that country, but Immigration Minister Scott Morrison said they all refused to meet the officials.
"The 157 illegal maritime arrivals... have been transferred to Nauru overnight for offshore processing, following their decision to refuse to meet with Indian consular officials," Morrison said in a statement.
Morrison said the government had provided a "rare opportunity" for many of those onboard the vessel to "go back to where they had been living in safety in India, where they have family and friends, rather than go to Nauru".
"It is very disappointing that after having had access to their legal representatives on July 29, all 157 illegal maritime arrivals coincidentally chose not to talk to Indian consular officials," he said.
Lawyers representing many of the group, who have challenged their treatment by Australia in the High Court claiming false imprisonment, condemned the transfer of the men, women and children to Nauru.
"They have just spent a month in detention on the high seas locked in windowless rooms for at least 21 hours a day, not knowing where they were and living in constant fear," said Hugh de Kretser, executive director of the Human Rights Law Centre.
"Now they have been secretly sent overnight to Nauru. We hold grave concerns for their mental health."
De Kretser said lawyers had been seeking urgent access to the 157 to talk to them about their case, but had only been able to speak to four in telephone interviews of one hour or less.
"The secret overnight transfer is a deliberate move to prevent legal scrutiny," he said.
- India no longer an option -
The group is the first boatload of asylum-seekers to reach the Australian mainland since December, after Canberra hardened its policy on unauthorised boats to ensure some were turned back where possible.
Under Australia's policy to stop people-smuggling boats, all asylum-seekers arriving by boat are sent to Nauru and Papua New Guinea for processing and resettlement, even if they are found to be refugees.
Morrison said in the current case, if they were found to be refugees they will be resettled on Nauru, not in Australia.
"If they are not found to be a refugee they will go back to Sri Lanka, not India. Going back to India, where they are likely to have family and friends, is no longer an option for those who were living there," he said.
Morrison said it was concerning that more children will now be in immigration detention, but it was more important that no more died on boats which often foundered during the voyage to Australia.
Conditions on Nauru have been questioned by rights groups, with Amnesty International Australia condemning the latest transfer to the Pacific island, where they said many asylum-seekers had been living in detention for almost a year without a decision on their refugee status.Australian Christian leaders last week called for a royal commission into the treatment of children at Nauru, saying evidence showed they were "experiencing terrible physical and mental suffering".
But Prime Minister Tony Abbott defended the transfer, saying he was confident it was safe to send people to Nauru.
"If we are interested in safety, and we must be, the safest thing to do for everyone is to stop the boats because as long as the boats keep coming, the drownings will keep happening," he said.