In its annual World Report, the group said successive Australian governments had prioritised domestic politics over international legal obligations towards asylum-seekers, who faced "draconian new policies in Australia" diverting them to third countries.
Under the previous centre-left Labor government, Australia began sending asylum-seekers arriving by boat to Papua New Guinea and Nauru for processing, later tightening the rules to say none would be resettled in Australia.
The new conservative government of Prime Minister Tony Abbott has hardened the policy further, implementing a military-led programme to turn back asylum-seeker boats at sea, provided it is safe to do so.
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"Last year Australia's two major political parties were hell-bent on using cruel policies to deter asylum-seekers, even at the expense of the country's international reputation," said HRW Australia Director Elaine Pearson.
"Sending asylum-seekers to Papua New Guinea and Nauru feeds into the government's 'out of sight, out of mind' mentality."
The report criticised Australia's mandatory detention of those arriving in the country without a visa.
"The United Nations High Commissioner for Refugees has repeatedly expressed concern regarding the mandatory and indefinite detention of asylum-seekers in offshore centres, where conditions are harsh and unsatisfactory and individuals get little help making their claims," it said.
The HRW report comes after the UNHCR last year released a harsh review of the facilities for asylum-seekers on Papua New Guinea's Manus Island and in Nauru, saying they failed to meet international standards of treatment.
The agency said the camps, which house hundreds of asylum-seekers, amounted to arbitrary detention in breach of international law and failed to provide an efficient system for assessing refugee claims or safe and humane conditions, criticisms Canberra dismissed as "quite overstated".
HRW said Australia had also been increasingly unwilling to publicly raise human rights abuses in countries with which it has strong trade or security ties, fearing that doing so would harm its relations with some Asian governments.
Read: Human Rights Watch report below
