The commission's report, Deserving Dignity, also said the UK Border Agency should pilot a guardianship programme for unaccompanied young asylum seekers to ensure their best interests are protected.
The commission rejected government plans to use X-rays to try to work out if asylum seekers are under 18, and demanded the repeal of laws that could deny financial support to the families refused asylum.
Sir John Waite, co-chair of the independent commission, said: "We hope policy-makers will take note and look again at ending practices such as the detention of children - I hope we can all find common ground in agreeing that, whatever happens, the best interests of the child must be paramount."
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