The children, thought to have been as young as 14, began legal proceedings in 2005 for being “wrongfully detained”.
Previously, immigration officers could refuse to accept a person’s claim to be under 18, if they suspected otherwise, and deal with them as an adult.
The government has since accepted its policy was unlawful, and changed it.
The compensation, plus a further £1m in costs, was paid to a number of boys and girls from countries including Afghanistan, Iran, Somalia and China, reports the Guardian newspaper.
The payments were made in 2009 and 2010 but have only just come to light.
The children had launched judicial review proceedings of the Home Office’s policy in 2005.
Mark Scott, of Bhatt Murphy Solicitors, who represented the children in their judicial review proceedings, said: “It is obvious that vulnerable children who have done nothing other than to seek help should not be locked up by the State.”
Before 2005, the judgement on whether they were 18 or over could be made by an individual immigration officer and they could then be kept under lock and key in an adult detention centre.
This policy was eventually accepted to be unlawful by the Home Office in January 2007, which conceded that it “did not strike the right balance between, on the one hand, the interests of firm and fair immigration control and, on the other hand, the importance of avoiding the detention of unaccompanied children”.
A UK Border Agency spokesman said: “We take the welfare of young people exceptionally seriously.
“Where there is any doubt over an individual’s age, they will not be detained unless an independent local authority age assessment concludes that they are over 18. These checks are carried out by social workers with expert knowledge.
“All of our front-line staff receive specialist training to ensure that the welfare of young people is considered at every stage.”