About 150 asylum seeker children in mainland detention centres will be released into the community on bridging visas by the end of the year.
But hundreds of children on Christmas Island and Nauru will stay locked up.
The federal government has announced plans to boost bridging visa support services - including access to health care, schooling and English courses - which will allow some detained children to move into the community with their families.
Children in mainland detention centres who are aged under 10 and who arrived before July 19 last year will be eligible for release under the new plan.
Immigration Minister Scott Morrison has not provided an exact number of how many children will be released, but refugee advocate group Chilout said it was about 150 children.
The change also means 1547 children currently in community detention could be moved onto bridging visas.
But about 700 children will remain in detention centres, including those in Nauru and on Christmas Island.
Mr Morrison said it was vital to uphold the policy which was stopping people getting on boats.
"It's important we get those who are in detention on the mainland out of detention," Mr Morrison told ABC radio.
"But I certainly don't want children getting on boats, and customs officers and navy officers having to go back to the gruesome tasks of saving children in the water, and in the worst case, getting corpses out of the water."
Greens senator Sarah Hanson-Young said keeping children locked up on Nauru and Christmas Island was unacceptable.
"The Abbott government is destroying hundreds of vulnerable children by locking them up in appalling conditions offshore," she said in a statement."
The Abbott government should close the camps, save billions of dollars and end the unnecessary cruelty. The immigration minister can and should do that today."
The opposition says the government was merely claiming credit for a Labor plan to get kids out of detention.
Mr Morrison's announcement comes just days before he is due to give evidence to the Australian Human Rights Commission inquiry into children in detention.
The minister has been critical of commission's president, Professor Gillian Triggs, labelling some of her observations about child detention as "sensational".
The inquiry has heard claims of self-harm, mental health problems and medical neglect and Prof Triggs is expected to grill Mr Morrison over the government's policies.
The government says moving families from detention centres and out of the community detention program will save the budget about $50 million.