A former human rights commissioner has called for significant changes to the immigration system, including compensation for ''victims'' of mandatory detention and hostels for migrants and most asylum-seekers.
Sev Ozdowski who prepared the ground-breaking report on children in immigration detention centres four years ago remains highly critical of the system.
Immigration Minister Chris Evans said the Government was committed to rolling out more humane policies on the treatment of asylum-seekers.
''In line with these commitments, the discredited Pacific solution and the punitive temporary protection visa regime have been dismantled and debunked,'' he said.
''The Labor Party also went to the last election with a commitment to maintain a system of mandatory detention and the excision of certain places from the migration zone, and both commitments will be honoured.
''Unauthorised boat arrivals will be processed at Christmas Island and will receive legal assistance and access to independent review of unfavourable decisions.''
But Dr Ozdowski said the Government should scrap offshore processing of people seeking protection, warning the country would create the ''Indian Ocean solution with Christmas Island as its headquarters''.
''There is not much difference between Christmas Island and Nauru except the island is huge,'' according to Dr Ozdowski, who is now an adjunct professor at the University of Sydney's Centre for Peace and Conflict Studies.
''It will have all the signs when people are locked up there as we've seen in Woomera. We'll have all kinds of unrest and mental trauma associated with it it's just the nature of the beast.''
The Government should also ''remove other vestiges of indefinite, non-reviewable mandatory detention'' so the system was in line with international human rights law.
Senator Evans said he had already reviewed the files of people who had been in immigration detention for longer than two years in order to resolve their cases.
Dr Ozdowski called for an inquiry into the role bureaucrats played in this ''sorry saga''.
''I know it's a very radical proposal [but] I also believe there should be some identification of individual officers who were involved with day-to-day support of the system because simply where there were victims, there were perpetrators.''
Asylum-seekers who were lawfully detained under existing legislation should receive compensation for their pain and suffering.
''My records documented, for example, cases where advice of mental health officials ... that somebody needed to be taken to hospital or that a child needs to be released because they can't be looked after in immigration detention were simply ignored not once, twice, 10 times but in one case we found 20 times,'' he said.
''So they are people who were wrongfully kept in those conditions and because of that they lost their health and clearly they are entitled to compensation.''
Dr Ozdowski who came to Australia as a refugee 33 years ago said the Government should set-up hostel-style centres for migrants and most asylum-seekers.