Federal cabinet agreed on the royal commission's terms of reference today, with former Northern Territory chief justice Brian Martin named to head the inquiry.
Prime Minister Malcolm Turnbull announced the royal commission on Tuesday morning, after what he described as "shocking" and "appalling" vision of the abuse of teenagers aired on the ABC's Four Corners.
Teenage boys were shown being assaulted, stripped naked and tear-gassed at Darwin's Don Dale detention centre, and in one instance shackled and hooded in a chair at a facility in Alice Springs.
Media player: "Space" to play, "M" to mute, "left" and "right" to seek.
Mr Turnbull said there was a need to urgently investigate practices at the Done Dale centre, andruled out expanding the inquiry beyond the Northern Territory.
"This is an inquiry into the juvenile and youth detentions of the Northern Territory," he said. "In terms of this fact-finding exercise, what we have is some parameters."
But Mr Turnbull did leave the door open to potential compensation for victims.
"There are avenues for seeking compensation that exist within the law as it stands and these are matters that the Commissioner," he said.
"He is in a position to make recommendations of that kind."
Of key concern for the royal commission will be how mistreatment of detainees was allowed to continue, despite independent reports raising serious concerns about their treatment.