Almost 10 classrooms worth of children are in jail in one state alone as bail changes trigger a sharp increase in custody numbers.
NSW Premier Chris Minns defended his bail changes on Thursday as data showed more than 230 children were in NSW jails in June.
That figure was 34 per cent higher than two years earlier, the state's crime statistics bureau said.
It reversed a trend of declining numbers of jailed children, the bureau's executive director Jackie Fitzgerald told AAP.
The majority of jailed children have not been convicted, with only 66 in custody due to sentencing.
More than 70 per cent are on remand while they go through the court process.
But the increase is not necessarily driven by laws placing additional tests on bail, suggesting access to bail has tightened.
"It seems to be beyond just the offences that were targeted or the particular circumstances that were targeted under the legislative change," Ms Fitzgerald said.
The state government has limited access to bail for children aged 14 and over accused of break-and-enter and motor vehicle theft offences while bailed on similar charges.
Bail for accused domestic violence offenders has also been restricted.
"We have had a lot of conversation about bail and remand in NSW, both in the adult space and the youth space," Ms Fitzgerald said.
"Whether it's that, or it's something that magistrates are seeing in the court, there has been a move towards more serious bail determinations for young people irrespective of those legislative changes."
About eight per cent of children in NSW are Indigenous, but that proportion rises to almost 60 per cent for those in jail - in violation of Closing the Gap targets.
Mr Minns said the bail changes played a part in the increase and were made because the system wasn't working.
"Repeat offenders were being arrested, given bail, and then the charges were either being dropped or dismissed," he told reporters on Thursday.
Kids were running the risk of getting into a serious crash in a stolen car or escalating their criminality until they were old enough for a long prison sentence.
"Our sole objective is to stop reoffending and to get a young person who's lost their way back on track," he said.
Greens MP Sue Higginson said the money spent locking up children would be better spent on social services and diversion from the criminal justice system.
"Locking up kids is the most criminogenic thing we can do to them," she said.
"It increases the likelihood of reoffending, entrenches disadvantage and drives higher crime rates."
Even with the recent surge, NSW's juvenile prison population remains lower than a decade ago, when more than 300 children were locked up.
NSW operates the nation's largest prison system, though it trails well behind the Northern Territory for the highest proportion of residents incarcerated.
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