A parliamentary committee sitting in Canberra has been flooded with reports of mistreatment of institutionalised children that some MPs believe amounts to human trafficking and modern slavery.

The committee is considering recommending a world-first clause in a Modern Slavery act that would aim to cut the supply of Australian money to the institutions and redirect it to help reintegrate children into their home communities.

MPs are also considering making it a criminal offence to organise trips for Australians to visit orphanages across the world where an estimated eight million children are living.

Every year Australian schools, universities, non-government-organisations and travel agents organise for thousands of Australians to volunteer in orphanages in Cambodia and other impoverished countries.

Griffith University law school's Kate van Doore told the committee that more than half of all Australian universities advertise orphanage placements as part of their international volunteering opportunities.

She said 15 per cent of high schools in Victoria and the ACT arrange trips to overseas orphanages or fundraise for them.

But multiple studies and surveys show that more than 80 per cent of the children in orphanages around the world have at least one living parent and almost all have families who should be caring for them.

They show it is harmful for children to be separated from their families.

Unfettered access to them by usually well-meaning foreign volunteers also leads to frequent broken relationships that leave children distrustful of anyone, the research studies show.

Liberal Senator Linda Reynolds, who is sitting on the committee, said she was "shocked" to see the mistreatment of children during a visit to Cambodian orphanages.

She said Australians are becoming more aware of the harm caused to children by supporting such institutions.

"But the stark reality is that many Australians are paying child traffickers and child abusers," she said.

In a letter to the committee 17-year-old Sinet Chan described how she was raped and other children were beaten, lashed and left starving in a Cambodian orphanage, despite regular visits from foreigners who would make generous donations.

"I would like to strongly urge the Australian people not to support, donate to, or volunteer at orphanages," said Ms Chan, who was rescued by Australian Tara Winkler, whose Cambodian Children's Trust campaigns against orphanages.

"The support of orphanages has created a thriving industry in which children are separated from their families and subjected to terrible abuse and neglect - as I was," Ms Chan said.

An Australian child protection organisation Forget Me Not told the committee how parents in some countries are convinced to allow their children to be taken away "for education".

But false identification papers and death certificates are made to portray the children as orphans before they are sold to orphanages which profit from so-called "orphan tourism", donations from overseas and inter-country adoptions.

"Some children are sent out to beg for funds in bars at night or hand out fliers advertising their orphanages," the Forget Me Not submission said.

"Some orphanage operators have deliberately kept children malnourished to attract more sympathy and thus more money," it said.

"Even where orphanages are well run, over 60 years of research tells us that the very process of institutionalisation is harmful to a child's development."

The Cambodian government plans to reintegrate 30 per cent of 16,579 children living in about 600 orphanages by the end of next year.

Half of Cambodia's orphanages are unregistered and those that are receive little or no government monitoring or oversight.

Senator Reynolds said she could not pre-empt the recommendations of the committee set up to inquire into a Modern Slavery Act but "so far members have shown bipartisan support" for including a clause specifically relating to overseas institutions where children are living.

"I am confident it will have the support of members," she said.