National broadcaster ABC last night showed footage of offenders, many indigenous, being stripped naked, tear-gassed and held in solitary confinement for weeks at a youth detention centre in the Northern Territory in 2014 and 2015.
In one video from last year, a 17-year-old is hooded, shackled to a restraint chair and left alone for two hours.
Prime Minister Malcolm Turnbull said he was "shocked and appalled" at the images from the ABC's Four Corners current affairs programme.
Turnbull said a royal commission would be established along with the Northern Territory government to investigate the centre.
"This needs a thorough inquiry, we need to move quickly on that, get to the bottom of it and expose what occurred and expose the culture that allowed it to occur and allowed it to remain unrevealed for so long."
Barrister John Lawrence told the ABC a child being hooded and cuffed was reminiscent of Guantanamo Bay, the notorious US military prison in Cuba that holds terror suspects.
"One of them has had the experience of sitting in one for just under two hours with a spit hood over his head, a la Guantanamo Bay," he said.
The Northern Territory has one of the highest crime rates in Australia, with indigenous offenders making up more than two-thirds of the prison population.
According to Amnesty International, Aboriginal children are 26 times more likely to be jailed than their non-indigenous counterparts as they struggle to deal with poor education, high unemployment rates, and substance abuse.
Giles sacked John Elferink as Corrections Minister and took over the portfolio himself, while ordering police to investigate whether any laws had been broken by the prison guards.
He said the royal commission should not just probe the corrections system but also child protection in the Northern Territory.
"This is not a blame game, this is recognising that there are children who are being neglected, unloved, getting into trouble, causing trouble in the streets and finding their way into our detention facilities.
