Immigration Minister Scott Morrison said the man, named by refugee advocates as 24-year-old Iranian Hamid Kehazaei, was being treated in a Brisbane hospital but his condition was extremely poor.
"The Department of Immigration and Border Protection's chief medical officer, I've asked to review the clinical treatment of this young man," Morrison said.
"That young man is still with us but his condition, as you know, is extremely, extremely parlous."
"When someone becomes ill, they receive outstanding care from the people who work as part of our mainland detention network and in the offshore processing centres," the minister added.
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Under Canberra's hardline immigration policy, boatpeople arriving in Australia since July 2013 have been sent to camps on Manus Island and the tiny Pacific state of Nauru. They are resettled in those countries if their refugee claims are valid.
"Hamid is a victim of the shocking conditions and medical neglect on Manus Island. It is inexcusable that he developed septicaemia on Manus Island," Rintoul, a spokesman for the Refugee Action Coalition, said in a statement.
Rintoul said the Iranian was sent to the Manus Island camp in September 2013 under the previous Labor government.
Greens Senator Sarah Hanson-Young, a vocal critic of the government's policy of detaining asylum-seekers at offshore facilities, said the case was "a tragedy that could and should have been avoided".
Morrison previously refuted allegations of the camps' poor medical standards heard during an ongoing national inquiry into the mandatory detention of children, saying the facilities were "equivalent to those in the community, and in many cases far better".