Gillian Triggs, president of the Australian Human Rights Commission, said the probe would examine the impact of mandatory detention on more than 1,000 asylum-seeker children being held in immigration facilities in Australia and more than 100 on far-flung Nauru.
"These are children that, among other things, have been denied freedom of movement, many of whom are spending important developmental years of their lives living behind wire in highly stressful environments," said Triggs.
The inquiry will examine whether Australia is in breach of international child protection obligations and measure progress on the issue over the past decade.
A similar investigation was held in 2004 into the then-government's "Pacific Solution" of detaining asylum-seekers arriving by boat on Nauru and Papua New Guinea's Manus Island -- a policy aimed at deterring dangerous people-smuggling journeys from Indonesia.
Hundreds of asylum-seekers have died attempting the voyage in recent years.
The harsh Pacific detention policy was revived last year by former Labor prime minister Kevin Rudd, who made it tougher still by mandating that anyone who arrived in Australia by boat would be permanently settled in PNG or Nauru.
The number of children held in immigration detention dropped markedly following public outcry over the 2004 inquiry's findings, though Triggs was pragmatic on whether such a backlash would be seen again.
"The political circumstances are perhaps different today, the public has in some respect become used to the idea that we keep children in detention. So maybe it would be optimistic to imagine that we'd have quite the same impact this time around," she said.
"Self harm and extreme anxiety"
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The previous inquiry's report found mandatory detention of children was "fundamentally inconsistent" with Australia's international human rights obligations and minors locked up for long periods of time were at "high risk of serious mental harm".
During their time in detention -- an average of almost two years -- children were exposed to hunger strikes and violent acts of self-harm as well as wild riots which were contained with tear gas and water cannon, the report found.
There were self-harm incidents including attempted hangings and lip-sewings among juvenile detainees and some were diagnosed with depression or post-traumatic stress disorder after their release.
Education provided to children in detention fell "significantly short" of community standards and there were broad-ranging health concerns including the extreme climate at remote facilities, overcrowding and unsanitary conditions.
Triggs said there were an "unprecedented" number of children in detention under the current regime compared with the 700 seen 10 years ago, and the conservative government of Prime Minister Tony Abbott had offered "minimal cooperation" on the issue.
"In particular, we'd like to understand more about the mental health of these children. The instances of self-harm, how they're being treated when they're manifesting conditions of extreme anxiety," she said.
"I'd also like to understand how they're being assessed to be sent offshore to Nauru. Why some are being sent, why some are not."
Immigration Minister Scott Morrison rejected Triggs' claim that the government had been uncooperative, and said there were so many children in detention because of border security "failures" by the Rudd government, which was voted out in September.
"There were over 1,000 children held in detention when we came to office... because over 50,000 people turned up on illegal boats on Labor's watch," he said.
Morrison said the government would cooperate with the inquiry and any recommendations would "be treated with respect and considered".
ajc/bp/lm
AFP