Australian taxpayers are spending up to $537,000 per year on each asylum seeker and refugee held offshore.
Advocacy groups have released new figures showing offshore processing will cost $1.2 billion over the next three years.
The report - released on Tuesday by the Asylum Seeker Resource Centre, Save the Children and GetUp - comes as the Senate debates the repeal of medevac laws.
The calculations are based on 535 people being held offshore, although this number has since fallen to 466 asylum seekers and refugees.
"Whilst the human cost of Australia's six-year failure to find a solution for all those people trapped offshore remains devastating, so too is the economic impact for a government increasingly in search of fiscal savings," the report said.
"A solution should be found urgently - to the benefit of both these people and the budget bottom line."
The report found it would be significantly cheaper to detain asylum seekers on the Australian mainland, and even less expensive to keep them in the community on bridging visas.
Reverend Tim Costello, from the Community Council of Australia, travelled to Parliament House on Tuesday to urge the Senate to keep the medevac laws in place.
He dismissed the government's argument asylum seeker boats to Australia would restart under medevac, saying that would have happened already.
"I think anxiety and fear ... has damaged the Australian soul, we've become fearful," he said.
The laws, which passed against the government's wishes, gave doctors a greater say in transferring refugees from offshore detention to Australia for medical treatment.
Debate on the legislation continued on Tuesday, as independent senator Jacqui Lambie weighs up whether to support the repeal.
Senator Lambie has offered to back the repeal bill on one condition, but will not say what her ultimatum involves.
It is believed the condition could centre on the government accepting New Zealand's longstanding offer to resettle some asylum seekers in offshore detention.
Scott Morrison has ruled out accepting the New Zealand deal.
"Our policies on those matters haven't changed," the prime minister said.
More than one third of asylum seekers and refugees in Papua New Guinea and Nauru have applied for transfer to Australia, according to government figures provided to The Australian.
A total of 171 people have lodged applications, hoping to secure transfers soon, in case parliament decides to unwind the medevac scheme.
Former MP Kerryn Phelps has accused the government of deliberately leaking people's private medical information to discredit the medevac scheme.
Dr Phelps, who helped pass the medevac laws, wants the apparent leaks investigated.
The government has previously claimed the medevac laws would place strain on hospitals and public housing.
"None of that has happened," Opposition Leader Anthony Albanese told reporters.
"The truth is that this is measured legislation. It's simple legislation. It provides for the basic view that if someone needs health care, who we are responsible for, they should receive it. It's as simple as that."
Australian Associated Press