Leaked on Monday, the aid agency quotes an intelligence officer in charge at the time saying mistreatment was all "part of the process".
In a never-before-seen 24-page document, the Red Cross also said occupation military intelligence officers estimated up to 90% of those detained in Iraq were arrested by mistake.
The report added to the pressure on US officials by revealing that commanders were alerted to apparent abuses at Abu Ghuraib months before they opened a criminal investigation.
Tantamount to torture
The Red Cross, which has special access to war zone prisons under international treaties, said mistreatment of prisoners "went beyond exceptional cases and might be considered as a practice tolerated by the Coalition Forces".
Abuse was "in some cases tantamount to torture".
Although most of the agency's observations concerned US forces, it also piled pressure on Washington's closest ally, describing British troops forcing Iraqi detainees to kneel and stomping on their necks in an incident in which one died.
The International Committee of the Red Cross in Geneva confirmed that the confidential 4 February report, initially leaked on the Website of the Wall Street Journal, was genuine.
During a visit to the Iraqi prison in October, Red Cross delegates met prisoners who were being held naked in complete darkness. Others were forced to wear women's underwear.
The Red Cross's visit took place two months before pictures were taken of US troops abusing prisoners, which later led to criminal charges against seven soldiers.
US Secretary of Defence Donald Rumsfeld has said he was unaware of abuse until the investigation into the pictures was launched in January.
Seven soldiers charged so far, but
they may have been obeying orders
Those pictures appeared in the media last month, causing international outrage and prompting apologies by US President George Bush and other senior officials.
However, Washington has said it believed the practices were isolated incidents of aberrant behaviour by individuals and not usual practice.
The report says prison guards often opened fire with live ammunition on detainees who "were unarmed and did not appear to pose any serious threat to anyone's life".
The document said occupation intelligence officers told the ICRC that in their estimate "between 70% and 90% of the persons deprived of their liberty in Iraq had been arrested by mistake."
Among "serious violations of international humanitarian law" the report listed a failure to set up a system to notify family members of arrests, resulting "in the de facto 'disappearance' of the arrestee for weeks or months".
"The uncaring behaviour of the Coalition Forces and their inability to quickly provide accurate information on persons deprived of their liberty for the families concerned also seriously affects the image of the Occupying Powers amongst
the Iraqi population," it concluded.