The All Party Parliamentary Group on Women in the Penal System claims that in many cases, young offenders may just be "testing boundaries and taking risks" as part of the growing-up process.
They believe others are drawn into crime because of neglect or poor parenting, and that arresting them or putting them behind bars further blights their lives.
Bringing girls into the criminal justice system is said to be costly and damaging to their education and career prospects, the report says.
"It is also inappropriate for police services to be picking up girls for what essentially are welfare issues rather than criminal behaviour, such as being drunk."
As a result the MPs and peers believe the age of criminal responsibility for girls - and boys - should be increased to 14. At the moment 10 year-olds can face charges in England and Wales, younger than almost anywhere else in Europe.
The group's report, published on Wednesday, also claims the number of girls arrested each year is falling, from 64,573 in 2008 to 48,360 in 2010, while the number of violent offences they committed fell by 29 per cent in recent years.
The majority of girls who come into contact with police do so as a result of shoplifting, "low level" violence and public disorder - "usually involving the use of alcohol".
However 10,845 females aged under 16 spent the night in police custody in one recent year, which even some police chiefs believe is "not an appropriate environment for young girls".
The chairman of the APPG, Baroness Corston, said: "It is illogical to think we can treat all of our social problems and small misdemeanours with the blunt end of the law. At the more serious end, girls' problematic behaviour is often a signifier that they have welfare needs which need addressing, including poverty, substance misuse or domestic violence and abuse. But the majority of girls are just young and are simply pushing the boundaries.
"One way or another, girls are often unnecessarily arrested and detained when many of them should not be clogging up the system. Many officers will appreciate a return to back to basics policing while at the same time diverting girls from the costly process of cuffs and courts."