The impact of industrialised host nations deterrent immigration policies on the mental health of forced migrants has not been well characterised. The present study investigated the impact of Australia s refugee determination process (RDP) on psychiatric morbidity in community-based asylum-seekers (AS) and refugees. Psychiatric morbidity was predicted to be greater in AS than refugees, and to persist or increase as a function of time in the RDP. The effect on mental health of demographic and socio-political factors such as health cover and work rights were also investigated. Psychiatric morbidity was measured prospectively on five mental health indices at baseline (T1, n=131) and an average of 15.7 months later (T2, n=56). Psychiatric morbidity in AS significantly decreased between time points such that it was no longer greater than that of refugees at T2. Caseness of PTSD and demoralisation reduced in AS who gained protection; however, those who maintained asylum-seeker status at T2 also had a significant reduction in PTS and depression symptom severity. Reduced PTS and demoralisation symptoms were associated with securing work rights and health cover. Living in the community with work rights and access to health cover significantly improves psychiatric symptoms in forced migrants irrespective of their protection status.