Asylum seekers who alleged they endured physical and psychological harm on Manus Island between 2012 and 2016 say they "are finally being heard" after the Federal Government agreed to pay $70 million in compensation.

Key points: The plaintiffs alleged their time on Manus Island caused them physical and psychological harm

The plaintiffs alleged their time on Manus Island caused them physical and psychological harm They also claimed they were falsely imprisoned after PNG's Supreme Court ruled their detention was illegal

They also claimed they were falsely imprisoned after PNG's Supreme Court ruled their detention was illegal The in-principal agreement is yet to be approved by the court

The group alleged the Commonwealth breached its duty of care by holding them in conditions that did not meet Australian standards.

During the period of their incarceration there was also a riot that resulted in the death of an asylum seeker and serious injuries to other detainees.

They also claimed they were falsely imprisoned after Papua New Guinea's Supreme Court ruled their detention was illegal.

A Victorian Supreme Court trial against the Commonwealth and security companies Transfield and G4S, which had been delayed for several months, was due to start today and had been expected to run for six months.

Law firm Slater and Gordon, which ran the class action, believed it to have been the largest immigration detention trial ever in Australia.

When it began, legal representatives for the plaintiff told the court it had reached an agreement to settle the case.

The in-principle agreement, subject to court approval, will include payment of plaintiffs' legal costs, which to date are more than $20 million.

Sudanese refugee Abdul Aziz Muhammad, who was part of the action and now lives on Manus Island, said he was "really, really happy" with the outcome.

"I'm so excited, I haven't been so excited like this since I came to Manus Island," he said.

"One thing today I found is there are some people down there in Australia who care about us."

Sorry, this video has expired Lawyer details Manus Island class action settlement

Slater and Gordon lawyer Rory Walsh said the settlement agreement was not an admission of liability from the Government.

"It denied it was doing the false imprisoning ... the Commonwealth defence was that it was the PNG authorities doing the imprisoning and detaining and not them," he said.

"The denial of liability allows the Commonwealth and the defendants to run those positions in any other cases and maintain that position, the extent to which this $70 million settlement undermines the ability for them to do that or whether indeed it passes the pub test, is a matter for others to comment upon.

"We just ran it as a legal case."

Dutton blames Labor for legal caseload

In a statement, Immigration Minister Peter Dutton said settling the case was considered a more prudent option than going ahead with an anticipated six-month trial expected to cost tens of millions of dollars in legal fees alone.

Mr Dutton has blamed the former Labor government for the Department of Immigration and Border Protection becoming the most litigated Commonwealth department.

"Currently there is a caseload of almost 5,800 legal matters afoot," he said.

"[The department's] legal expenditure in 2015-16 totalled more than $72 million.

"There were four people in detention when Labor came to government in 2007.

"Apart from those in the Regional Processing Centres of Manus and Nauru, Labor left 30,000 illegal arrivals onshore, including 8,000 children in detention."

'We are finally being heard'

Lawyer Andrew Baker, also from Slater and Gordon, said if the settlement was approved, individual amounts of compensation would be decided based on the asylum seekers' experience.

"Individual settlement amounts will be calculated fairly, objectively and individually with regard to the length of each person's detention, the events and conditions they have experienced and been present for and the severity of injuries each person has suffered," he said.

"This settlement is an important step towards recognising the extremely hostile conditions the detainees endured at Manus Island.

"Fleeing religious persecution and violence and they came to Australia seeking protection but rather than considering their cases on shore, the Government sent this vulnerable group of people to be held on Manus Island indefinitely."

The class action was led by 35-year-old Iranian man Majid Karami Kamasaee, who was detained on Manus Island for 11 months from September 2013, and remains in a Melbourne detention centre.

Mr Kamasaee claimed he was persecuted by Iranian authorities for converting to Christianity, and that he had to flee the country under threat of being jailed for his religious beliefs.

The class action was brought by 1,905 people held on Manus Island between 2012 and 2016. ( Reuters )

He attempted to reach Australia by boat from Indonesia but it was intercepted by the Navy and he was transferred to the offshore processing centre.

In a statement read by lawyer Ebony Birchall, Mr Kamasaee said the settlement agreement meant he and his friends still in detention were "finally being heard".

"I cried every night until I had nothing left. I watched my friends reach breaking point and I prayed we would make it through," he said.

"Sadly many of my friends are still on Manus Island. It feels like they have been given life sentences.

"Our voices have never been listened to but today we are finally being heard and I hope everyone's suffering can be over as quickly as possible."