Australia broke international human rights rules when it denied a group of refugees a chance to challenge their detention, imposed on security grounds, a United Nations watchdog has said.

The criticism from the UN Human Rights Committee came on Thursday, as a legal challenge was launched in Australia on behalf of a detained Iranian asylum-seeker over Australia's controversial offshore processing deal with Papua New Guinea (PNG).

"Australia's indefinite detention of 46 recognised refugees on security grounds amounted to cruel, inhuman and degrading treatment, inflicting serious psychological harm on them," the UN committee said in a written statement.

It said in a review of complaints from the refugees - 42 Sri Lankan Tamils, three Rohingya Muslims from Myanmar and a Kuwaiti - that their detention was arbitrary and broke the International Covenant on Civil and Political Rights.

Asylum-seekers have become a top issue in the lead-up to Australia's federal election on September 7, with tough policies by the ruling Labor party and the opposition on "boat-people" proving popular in opinion polls.

Under Australia's PNG deal, the Pacific nation would be the primary processing and resettlement country for asylum-seekers attempting to reach Australia by boat, but it has already been criticised by the UN High Commissioner for Refugees.

Lawyers representing an Iranian asylum-seeker detained on Manus Island are challenging the agreement, known as the "PNG Solution", in Australia's High Court.

PM defends policy

The challenge argues that the decision to send their client to PNG is illegal because it fails to take into account Australia's international treaty obligations and Papua New Guinea's domestic law.

Barrister Mark Robinson has said that his client’s removal from Australia was invalid.

The PNG opposition has launched legal action in Papua New Guinea's courts in an attempt to thwart the deal.

However, Prime Minister Kevin Rudd shrugged off the notion of legal challenges to the agreement on Tuesday.

"There's always going to be challenges,'' Rudd said on the campaign trail in Brisbane for Australia's September 7 election.

"We have exactly the right policy message on this and exactly the right administration to back it up.

"We've been entirely mindful of early determinations by the Australian High Court."