A report by the charity Transform Justice says poor practice and lack of understanding of child welfare is leading to children being unnecessarily imprisoned on remand.
Although the number of children in custody overall is falling, the report found that the proportion of those in custody on remand is rising.
In the year ending March 2017, 21 per cent of children in custody were on remand, but by June 2018 this had risen to 30 per cent and is the highest monthly figure for 10 years.
In 2017 children were remanded in custody 1,269 times, but following trial or plea, in the majority of cases these young defendants were either found not guilty or given a non-custodial sentence, the report found.
Transform Justice, set up by former magistrate Penelope Gibbs, said that police and the courts need to change the way they treat young people accused of crimes.
Currently they are "too often treated as mini-adults for remand purposes", the report states.
This means they are often detained in a police cell overnight before their case is swiftly dealt with by an adult court, where "risk aversion dominates the decision to remand, rather than the best interests of the child".
This swift processing also leaves youth offending teams (YOTs) and defence solicitors with little time to prepare and arrange alternatives to custody such as local authority accommodation.
"The court is too often given little information, and sometimes no bail package is offered. The bench relies on information presented by the prosecution, and is often not trained to treat children differently to adults," states the report.
"No one understands the role of remand to local authority accommodation (RLAA) well enough, so remands are made without RLAA being offered, or for that matter pushed for by the bench."
The report adds: "It is in no child's best interests to spend a night in police cells, followed by a week in a children's prison, then maybe to be forced to live away from their home and community pending their trial.
"It's necessary to keep some children in a secure place as they await their trial or sentence, but the number of remands which do not end up with the child getting a custodial sentence suggest that the legal criteria are either wrong, or being misinterpreted."
The report makes 17 recommendations to overhaul remand hearings involving young people. This includes better training for judges, magistrates, prosecutors and legal advisers in child rights and welfare.
It should also be mandatory for a youth court magistrate to sit on any bench that decides on whether a child should be remanded.
The Crown Prosecution Service should alert defence solicitors and YOTs if they are opposing bail to give them more time to prepare.
Local authority accommodation should also be considered more frequently as an alternative to custodial remand, adds the report.
Researchers who worked on the report, have also found that in 2016/17 councils spent £18.1m in total on remand places for young people. Of these £8.9m were in Young Offenders Institutions, £5.4m in Secure Training Centres and £3.8m in secure children's homes.
"Local authorities are spending huge sums warehousing unconvicted children in unsafe child jails," said Gibbs, the charity's director.
"Most of these remanded children do not go on to get a custodial sentence. Agencies and courts need to change practice in order to prevent the wasteful use of remand.
"It's incredibly difficult for YOTs to provide a bail package at short notice but, if they could do so more often, short remands could be avoided".
The report also found that more than half (54 per cent) of young people on remand are black and minority ethnic. This is higher than the sentenced population (45 per cent) and the general 10- to 17-year-old population (18 per cent).
A more punitive and risk-averse stance to knife crime is seen by YOTs interviewed for the report as a factor in rising remand rates.
Since 2012 the number of knife crime offences committed by young people has risen by 11 per cent, while the number committed by adults over the same period is down 10 per cent.
In the year ending 2017 violent crimes were the main type of offence a young person on remand had been accused of.
A spokesman for the judiciary said: "A judicial youth justice working group meets with the Ministry of Justice during the year to look at current trends, and this has included youth remand.
"All magistrates and district judges who sit on youth cases are trained in relation to all aspects of practice and procedure relation to children and young people both at the outset of their sitting on such cases and on a continuing basis.
"Judicial independence means that decisions are individually considered, but the Judicial College publishes the Youth Court Bench Book, a publicly available online resource for all those dealing with children and young people and which sets out in detail the remand provisions applicable to those under 18.
"The guidance includes the criteria required for use of remand provisions and how the court must clearly explain its decision. Decisions can be challenged, including bringing the case before a judge in chambers.
"This supports consistency and structured decision making, as does the training provided which is regularly repeated and reviewed."