A six-year-old asylum seeker living on Christmas Island is "thin, sad and anxious" with her parents seeking damages from the federal government.
The Victorian Supreme Court heard on Friday the girl suffered from separation anxiety and nightmares.
The six-year-old was likely suffering from post-traumatic stress disorder and was preoccupied with bars and jailing, according to a psychiatrist who had examined her.
"It is unusual and extremely concerning to see this level of persistent psychiatric disturbance in a six-year-old child," the psychiatrist reported.
The court heard the girl is "thin, sad and anxious".
The child's parents have engaged Maurice Blackburn Lawyers to seek damages on her behalf, solicitor Katie Robertson told the court.
The immigration minister, secretary of the Department of Immigration and Border Protection and Commonwealth of Australia are listed as the proposed defendants on court documents.
The girl's father asked the court to suppress her identity because he feared persecution from government agents at home, due to his own political activities.
The court has agreed to refer to the child under the pseudonym "AS".
Ms Robertson said she will start to issue proceedings in the case next week.
In 2006 there was a landmark $400,000 payout for an Iranian boy psychologically scarred after being locked up in immigration detention.
The boy was just five years old when he first witnessed attempted suicides and abuse at Woomera and Villawood detention centres.
