Detainees at an Australian asylum-seeker camp in Papua New Guinea won millions of dollars in compensation for "degrading and cruel" treatment Wednesday, in a decision hailed as an important human rights victory.

Abuse, self-harm and mental health problems are reportedly rife in offshore processing centres, with detainees resorting to desperate protests like sewing their own lips together to raise awareness of their plight.

Wednesday's AUS$70 million (£41.6 million) conditional settlement, to be shared by 1,905 people who have been held on Manus Island since 2012, averted a public trial against the government and security providers Transfield and G4S.

A class action had sought damages for what claimants said was suffering due to the harsh conditions in which they were held.

It also called for a payout for false imprisonment after the Papua New Guinea Supreme Court ruled last year that holding asylum-seekers on Manus Island was unconstitutional and illegal.