No asylum-seeker will be held for more than a year unless they pose an unacceptable security risk and most detainees will be released within 90 days.
The changes are part of a suite of recommendations by the Joint Parliamentary Committee on Migration, issued yesterday.
The former Howard government's mandatory detention regime took a heavy physical and mental toll on asylum-seekers, some of whom were kept behind barbed wire for years.
Now the committee's report has recommended an end to mandatory detention, and a number of other changes, including:
An end to charging people in detention for the cost of their detention. Detainees are currently charged $125.40 per day for the period of their detention.
Increased oversight of national security assessments on detainees.
Greater detail in the quarterly review conducted by the Department of Immigration on individual cases.
Tabling of the Ombudsman's six-monthly review in Parliament and a ministerial response.
New legislation to enshrine the changes in law.
Immigration Minister Senator Chris Evans welcomed the report and the bipartisan approach taken by the Opposition.
He said the changes were another step towards ''the abolition of John Howard's inhumane approach to immigration detention''.
The report would help inform legislation planned for next year which would put changes to immigration detention into law, he said.