A319 First Officer reports inappropriate use of the UPDATE POSITION function of the MCDU after being advised by Dispatch that their destination airport is closed due to weather.

Narrative

Enroute to our destination we were informed via Dispatch that the airport was closed due to weather and needed to divert to an alternate. The Captain then (without confirming with me his entry) typed the alternate into the 'UPDATE' position box on the position page of the MCDU. I looked down to see what he had done; and before I could say that he had placed his entry in the wrong place; he hit enter and the aircraft position immediately moved itself. At this point we had no accurate way of determining our position/route so I immediately selected our current heading and asked the Captain to get us vectors to the alternate as we could no longer navigate through the FMGC. At some point along the way to our alternate we regained a accurate IRS position and our navigation ability returned to normal. The Captain had stated to ATC that we had had a 'navigation malfunction' and that was the reason for the vector request. Two things would have prevented this: #1 Follow SOP and confirm all entries first with the other pilot #2 Disable the 'UPDATE' position feature of the FMGC as it serves no purpose in our domestic operation.