The development comes as Australia hardens its stance against asylum-seekers arriving by unauthorised boats by sending them to Papua New Guinea and the tiny Pacific state of Nauru for resettlement.
The Australian Broadcasting Corporation said it secretly filmed meetings in Malaysia between an Iraqi known as Abu Tarek and potential customers, in which he offered to provide the documents.
"An Australian visa, everything is proper -- genuine passport, genuine visa," Tarek said, the ABC's Four Corners programme reported.
The Iraqi said that asylum-seekers using passports issued by Bahrain and Oman had boarded flights out of the country and then applied for asylum on arriving at an Australian airport.
"Yes, to Australia, New Zealand, lots of people have arrived there," he said, reportedly revealing that he sold two types of Australian travel documents -- holiday visas and transit visas for flights going on to New Zealand.
The report said that asylum-seekers were advised to use the passports, then tear up the documents before arriving in Australia.
It said Iraqi national Abu Saleh, in jail over the nightclub stabbing death of a man, had organised a people-smuggling boat which sank in September off Indonesia, leaving more than 40 people dead.
The report quoted Lebanese asylum-seeker Abdullah al Qisi saying he was escorted to meet Saleh in jail by police.
"I found Abu Saleh. He was like a king. He always have six, seven phones and like $100,000 on the table," he said.
The policy has resulted in a dramatic drop in the arrival of boatpeople, which hit 50,000 in the previous financial year.
