Myanmar should close bleak camps where tens of thousands of displaced Rohingya Muslims have been trapped for nearly five years, according to a commission led by former United Nations chief Kofi Annan.

More than 120,000 Rohingya have languished in camps for internally displaced people (IDP) since they were driven from their homes after a wave of inter-religious violence engulfed western Rakhine State in 2012.

Most are not allowed to leave the camps, where they live in piecemeal shelters with little access to food, and are denied access to basic education and healthcare.

"It’s really about time they close the camps and allow people, particularly those who have gone through the [citizenship] verification process, access to freedom of movement and all rights of citizenship," Annan told the Reuters news agency by telephone.

Myanmar's de facto leader Aung San Suu Kyi last year appointed Annan to head a commission given the task of healing long-simmering divisions between Buddhists and Muslims in Rakhine.

"The commission calls for a plan to close all IDP camps in Rakhine state," Ghassan Salame, a member of the body, told reporters at the launch of the body's interim report on Thursday.

READ MORE: A fight for survival - Rohingya refugees in Bangladesh

The report also called for the government to ensure "security and livelihood opportunities at the site of return/relocation" for those leaving the camps, including the building of new houses.

Residents complain of a system of checkpoints in parts of Rakhine state and widespread extortion by officials at roadblocks.

Myanmar has long faced international condemnation for its treatment of its Rohingya Muslim minority, with the issue reaching boiling point in recent months after the army launched a bloody crackdown in the north of Rakhine following a number of deadly attacks on several police border posts in October.

UN investigators who interviewed escapees in Bangladesh have accused Myanmar's security forces of responding with a campaign of murder, gang rape and arson that may amount to genocide.

IN PICTURES: Rohingya, Chased from Myanmar, unwelcome in Bangladesh

According to the UN, 74,000 people have fled the conflict zone since October.

In February, a UN report accused Myanmar's security forces of carrying out mass rapes, burning families to death and other killings, possibly amounting to crimes against humanity.

Yanghee Lee, the UN special rapporteur on human rights in Myanmar, on Monday called the on UN to launch its highest-level investigation into the violence, which she said may be part of a government campaign to drive the Rohingya from the country.

But a draft resolution tabled by the UN Human Rights Council stopped short of calling for a Commission of Inquiry into the violence.

Salame said the Annan commission backed calls for an independent investigation into the violence in northern Rakhine in its report, but said anything further would be beyond the body's remit.

It identified three initial camps to close - one housing more than 200 Rohingya, along with two others that are home to Buddhist Rakhines and Kaman Muslims who were also displaced in the 2012 violence.

Suu Kyi's office welcomed the report and said it would implement the "large majority of recommendations" without giving more details.