An American charter company, US Shipmanagers, is set to provide its liner the Ocean Gala, built in 1982 and transformed into a floating hotel anchored in a Baltic Sea port.

"The provider has to find a homeport and the vessel has to be appraised" to make sure it meets safety and comfort standards, Swedish migration agency spokesman Alexandra Elias told AFP.

Negotiations are well on track to agree details of the arrangement, under which the agency will pay 450 Swedish krona (48 euros) per passenger to US Shipmanagers.

The charter company wants to anchor the Ocean Gala in Haernoesand, some 400 kilometres (250 miles) north of Stockholm, but local authorities there are opposed, officially for administrative reasons. Sweden is struggling to find space for the 163,000 asylum seekers who arrived in the Scandinavian country last year, part of the huge wave of migrants flooding into Europe, many fleeing war in Syria.

Due to a shortage of beds in migrant centres, thousands are housed in churches, mosques, gymnasiums and evacuation centres run by civil security authorities. "The situation is still tense. In 2016 we will need an extra 20,000-30,000 places," said Elias. Five thousand refugees housed in campsites or holiday villages will have to make way for tourists before the summer.

The tide of refugees entering Sweden was significantly reduced after Stockholm reinstated random border controls in November.

Slightly fewer than 700 asylum seekers were registered in the last seven days, compared to some 10,000 new arrivals per week last October.

- AFP