Riots and fires are believed to have broken out at the Yongah Hill Detention Centre in Western Australia.
Video footage obtained by Newshub shows black smoke billowing into the air, with an orange glow coming from cells.
Iwi n Aus spokesperson Filipa Payne says New Zealanders in detention fear for their lives.
"People have been left in locked cages in a compound while their bunks are burning and the fires are going on right beside them."
The violence follows reports that an Iranian detainee died after being refused mental health treatment. Officials have denied anyone is dead.
"They have first locked themselves in their rooms for their own safety," says Ms Payne. "Now those rooms are on fire - they're sitting out in amongst burning buildings, worried for their own lives."
Suicidal children
Meanwhile, Amnesty International is urging Pacific leaders to address escalating health issues in refugee children on Nauru Island.
Leaders will be gathering at the Pacific Islands Forum this week. Meg de Ronde from Amnesty International says Australia's refugee policy will be top on the agenda.
"We now understand from medical professionals there are possibly up to 20 children who are suicidal or have resignation syndrome," she told Newshub.
According to the Australian Asylum Seeker Resource Centre, there are currently almost 2000 people being held at sites like Nauru, Christmas Island, Manus Island and Villawood. The number has fallen significantly since 2013, when there were more than 10,000.
Resignation syndrome induces a catatonic state, usually as a result of psychological trauma.
Ms de Ronde says those remaining on Nauru and Manus Islands are being held in dangerous and degrading conditions, and people need to come before politics.
"The current delay for bringing refugees to safety is purely political point-scoring for Australian politicians."
New Australian Prime Minister Scott Morrison is considered a hardliner on refugees and asylum seekers.
"The Australian government has to make sure that all of the people they're responsible for are immediately brought to safety, and that they take up the offer that's been given by New Zealands if they're not willing to take them themselves," says Ms de Ronde.
Amnesty has co-signed an open letter along with 84 other human rights groups calling for action.
Newshub.
