* Nauru says 600 asylum claims to be processed this week
* Australian camps criticised by UN, rights groups
* Camp gates on tiny Pacific island to be thrown open (Adds statement from Australian government, details, paragraphs 8-9, 11-12)
By Sonali Paul
MELBOURNE, Oct 5 (Reuters) - Nauru unexpectedly said on Monday all 600 asylum seekers held at a controversial Australian detention centre will be allowed to move freely around the tiny South Pacific island and all their asylum applications will be processed this week.
Asylum seekers have long been a contentious political issue in Australia, although it has never received anywhere near the number of refugees currently flooding into Europe as they flee instability in the Middle East and North Africa.
Successive Australian governments have vowed to stop asylum seekers reaching the mainland, turning boats back to Indonesia when it can and sending those it cannot for detention in camps on Manus island in impoverished Papua New Guinea and on Nauru.
The harsh conditions at the camps, including reports of systemic child abuse, have been strongly criticised by the United Nations and human rights groups. An independent U.N. investigator postponed an official visit to Australia last month, citing a lack of government cooperation and "unacceptable" legal restrictions. ID:nL3N11X0DW
New Australia Prime Minister Malcolm Turnbull said last month he was concerned about conditions in the camps but gave no indication of a major policy change, so Monday's announcement from Nauru came as a surprise. ID:nL4N11T1W6
"The start of detention-free processing is a landmark day for Nauru and represents an even more compassionate programme, which was always the intention of our government," Nauru Justice Minister David Adeang said in a statement.
Australia would provide more police assistance to help Nauru with "safety, security and law enforcement", Adeang said.
The Australian government welcomed the announcement that the camp on Nauru would now be run as an "open centre" and said "eligible transferees" had been allowed to leave the camp at designated times since here February.
A statement issued by Immigration Minister Peter Dutton's office also said the Australian government would support Nauru by funding a "contract service provider to deliver settlement services to refugees in Nauru".
Australia has defended its detention policy as necessary to stop deaths at sea. No one processed at the Nauru or Papua New Guinea camps is eligible to be settled in Australia, even if they are found to be genuine refugees.
However, the camps have been criticised not only for their harsh conditions but also because it has become almost impossible for outside observers to gain access.
Some investors in the company that runs the camps, Transfield Services Ltd TSE.AX , have said they will push for greater transparency and oversight. ID:nL4N1175W9
(Editing by Paul Tait)