Segregating children who sexually abuse their peers can do more harm than good, according to evidence before a royal commission.
A panel of experts testifying at the Royal Commission into Institutional Responses to Child Sexual Abuse said young people who abuse need better support.
Forensic psychologist Jessica Pratley told the inquiry that children who harm others "have their own vulnerabilities" and isolating them can put them at further risk.
"Unfortunately, what we sometimes see is quite an extreme reaction ... and sometimes that extreme reaction can be quite counterproductive to that young person's recovery," Ms Pratley said.
"A child who is attending school, for example, where the school says that every recess, every lunchtime, this child has to sit outside the principal's office and can't socialise with other children.
"That's viewed as being a protective strategy but actually isolates that child further and increases their risk and their likelihood to use inappropriate coping strategies."
The commission's final public inquiry is examining the nature, cause and impact of child sexual abuse, hearing evidence from a range of international and local experts.
Forensic psychiatrist Marshall Watson said the reasons behind sexually harmful behaviour are varied but alleged offenders needed support.
"Although these young people have violated the rights of others, they have rights themselves, so they have a right to treatment," he said.
Supporting children who have been removed from their families and placed in out-of-home care is particularly difficult, the inquiry heard.
"Out-of-home care can be a very challenging place for young children," Dr Watson said.
"They are traumatised, they end up potentially in another environment with other traumatised children. If children don't have a safe, predictable environment, they are not actually going to get better."
There are 20,000 children in out-of-home care in NSW, with the commission hearing they need better targeted help. A recent NSW inquiry found deep flaws in the child protection system.
"It is not enough to put children in group homes with changing staff, with varying degrees of qualification," Ms Pratley said. "It is not an environment where children are going to repair their trauma."
The commission has previously heard evidence about children abusing their peers in out-of-home care as well as schools and juvenile justice facilities.
US academic Dr Elizabeth Letourneau told the inquiry recidivism rates were low among children who abuse their peers.
"Youth who engage in these behaviours are exceptionally unlikely ... to engage in them again," she said.
The hearing before Justice Peter McClellan continues.
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