Australia's practice of holding children in immigration detention violates international law and they should be speedily released into the community, the Australian Human Rights Commission says.
In its long-awaited report titled "The Forgotten Children" the commission has called for a royal commission into the treatment of children in immigration detention.
Its 10-month inquiry found prolonged and mandatory detention caused significant mental and physical illness.
Hundreds of assaults against children were reported and 128 teenagers harmed themselves between January 2013 and March 2014.
"There appears to be no rational explanation for the prolonged detention of children," the report, released on Wednesday, states.
"The mandatory and prolonged immigration detention of children is in clear violation of international human rights law."
The commission wants the government to ban indefinite detention, close the "harsh and cramped" Christmas Island immigration centre, get children off Nauru and appoint an independent guardian for unaccompanied minors.
The government disagrees.
Attorney-General George Brandis told parliament this has been a longstanding point of difference between the government and the commission.
"The government does not accept the commission's findings," he said.
Immigration Minister Peter Dutton - who only took on the job in late December - said many of the recommendations reflected existing government policies and were superfluous.
"Other recommendations would mean undermining the very policies that mean children don't get on boats in the first place," he said in a statement.
Numbers of children in immigration detention peaked at nearly 2000 in mid-2013 under Labor but now there are only 162 children still detained.
Opposition immigration spokesman Richard Marles said Labor would work through the report findings and recommendations and respond appropriately.
"The best thing we can do for children in detention is to have refugee claims processed quickly so nobody has to languish in detention with no hope of settlement," he said in a statement.
Greens immigration spokeswoman Sarah Hanson-Young said the report must be the turning point to end the cruel practice of locking children in detention camps.
"This vile, institutionalised child abuse has to end," she said in a statement.
"No longer can we turn a blind eye to the sexual, physical and psychological abuse that these policies of indefinite detention are inflicting on children."
Other human rights and asylum seeker lobby groups agreed.
Amnesty International said the report made it clear that all children and their parents must be released from detention centres in Australia onshore and offshore.
The group ChilOut said children must only be detained as a measure of last resort and only for the shortest appropriate period.
"This report highlights our dramatic failure to uphold our obligations, by detaining children arbitrarily as punishment for seeking asylum," it said in a statement.
