Tasmania's state-run child and adolescent mental heath service is overburdened, underfunded and not up to speed with contemporary practices, a review has found.
The government has pledged $4 million over two years in Thursday's budget to fix "long-standing issues and gaps" in the service, known as CAMHS.
"Despite the best efforts of dedicated and skilled CAMHS staff, the current system is overburdened," Minister for Mental Health and Wellbeing Jeremy Rockliff said on Tuesday.
The 114-page review determined the service is unable to properly help young people with complex mental health needs.
It also found CAMHS had gaps in services, was not consistent across Tasmania and needed structural changes and new facilities to align with contemporary practice.
The state government says it would adopt all seven recommendations of the report, including a more collaborative approach to delivering services.
CAMHS provides a range of mental health education and treatment services for people aged up to 18, plus support for young expectant mothers.
The state government will spend $500,000 on a new senior management team with the goal of creating a more unified service.
Some $1.8 million will go towards dedicated services for children in out-of-home care.
Tasmania's Commissioner for Children and Young People, Leanne McLean, said the funding was an essential first step.
"The COVID-19 pandemic has placed additional stresses on many children and young people," she said in a statement.
"At the same time, it has also stretched an already overstretched mental health service system, placing vulnerable and at-risk children and young people at even greater risk of harm."