Sophie Richardson, deputy Asia director of the New York-based group, said Vietnamese authorities were condemning street children to harm by throwing them into detention centres.
"Visiting world leaders should press Vietnam to uphold basic rights and freedoms," she said.
But Le Dzung, spokesman for Vietnam's foreign ministry, said Vietnam "had always placed importance on the protection, care, and education of children, including underprivileged and street children".
"All the measures are aimed at creating conditions for disadvantaged and street children to be protected, cared for, and educated … so that their lives become better," Le said.
The 77-page HRW report documents cases of violations of the rights of street children in Hanoi. It says that police routinely round up street children in arbitrary sweeps and detain them at de facto jails called social protection centres, for up to six months.
The report says that besides the appalling conditions, children were sometimes made to share cells with adults, offered no rehabilitation, no educational and recreational activities, and no medical or psychological treatment.
"All the measures are aimed at creating conditions for disadvantaged and street children to be protected, cared for, and educated … so that their lives become better"
Le Dzung, spokesman for Vietnam's foreign ministry
Children were also routinely abused, it says.
"Staff members in the so-called rehabilitation centre have slapped and punched children, and beat them with rubber truncheons," Richardson said.
"Children report being placed in isolation, deprived of food and medical treatment, and denied family contact. This violates both Vietnamese and international law."
The foreign ministry said the campaigns were to reunite street children with their families, and those who could not be reunited had been provided healthcare and even vocational training.
But HRW said although that was the policy, in practice staff members rarely tried to link children with their families or even notify the families about their children's whereabouts.
Richardson said: "On paper, Vietnam has good policies to protect street children, but the reality … is not rehabilitation, but institutionalisation and abuse, which leaves children in even worse shape."