Among recommendations made by the review, which is chaired by former Royal College of Psychiatrists president Sir Simon Wessely, is to reduce the role of parental consent in deciding whether a young person should be detained.
"Young people aged 16 or 17 should not be admitted or treated on the basis of parental consent," states the review.
Instead, the decision should rest with the young person if mental health professionals are able to determine they have the mental capacity to do so.
The review, announced by Prime Minister Theresa May in October 2017 to consider ways to improve the legal rights of those detained under the act, has also called on the government to launch a consultation on the ability of parents to consent to admission and mental health treatment for those under 16.
Despite curbing parental consent the review recognises the "vital role" parents have in young people's care. It recommends strengthening guidance that parents and carers have a right to be involved in the young person's statutory care plan.
Greater legal clarity is also needed when determining whether young people are able to make decisions about their treatment.
"Children and young people present particular issues not only because of their age and vulnerability but also in relation to their ability to make their own decisions. This means that they have particular needs that are different to those of older people," states the review.
It adds: "Above all, we want to establish a proper balance between the rights of young people and those who are legally responsible for them, usually their parents. Those with parental responsibility not only have their own rights, but are vitally important to the future care and welfare of a child or young person."
Improved rights for young people and their families when a placement is in an adult ward or in a hospital out of their area is also needed, says the review.
It is calling for health watchdog the Care Quality Commission (CQC) to be informed within 24 hours, rather than the current time limit of 48 hours, when a young person is placed on an adult ward.
A review of the suitability of the placement should take place within three days of admission "and must include consideration of moving the child or young person to more suitable accommodation".
The CQC should also be informed when a child is placed out of area and parents, carers and family members should have a right to visit a child when such a placement is made.
The review also recommends:
- Young people discharged from hospital be considered as a "child in need" by their local authority
- If a young person is placed out of area, the council where they live needs to be informed
- Accommodation be "genuinely" single sex, including access to bathrooms and daytime spaces
- All mental health in-patients, including young people, have a statutory right to support from a mental health advocate
- Greater attention paid to tackling the risk of exclusion from school that young black African and Caribbean children and young people face.
Carolyne Willow, director of children's rights group Article 39, welcomed the review's focus on the rights of children, as well as their families.
She said: "It has long been an anomaly that parents are allowed to have children admitted to mental health units, against the child's wishes, when feeling heard and in control is inextricably bound up with positive mental health.
"That said, the review rightly recognises the fundamental importance of parents and the enormous struggles many endure in securing health care for their children.
"We strongly support new duties around maintaining contact between children and their families, and the extension of advocacy support for children and parents."
The government has pledged to act on the review's findings and introduce a Mental Health Bill.
It has accepted two of the review's recommendations, that those detained under the act be allowed to nominate a person of their choice to be involved in decisions around their care. Also patients' preferences around their care will be listed in statutory "advance choice" documents.
A decision on the review's other recommendations will be made in a formal response early next year.