Youth Law and the children's commissioner warn that children are being kicked out of class without good reason while the government dallies on setting up a school disputes panel.
They say some schools are wrongly denying young people their right to an education and without a panel, there is no easy way to challenge it.
The government changed the law in 2020 to allow a disputes body to review school decisions but it has not yet set it up.
Youth Law general manager Neil Shaw said hundreds of families would benefit from a disputes panel to rule on disciplinary decisions like stand-downs and exclusions.
Without a disputes system, families' only option was an expensive and time-consuming judicial review in the High Court or a complaint to the Office of the Ombudsman, Shaw said.
While about 13,000 children a year were the subject of school disciplinary action like stand-downs, Shaw expected only a small number of those would make use of a dispute system.
However, he said at nearly every school the organisation visited, young people raised problems a disputes panel could deal with.
"A lot of them have to do with their rights at school - searches, it's not working out with the teacher so they're making requests about what the teacher's rights are and what the pupils' rights are in school."
One of the cases the organisation was currently working on involved a teenager who had been banned from some classes since the middle of the year following a disagreement with a teacher, Shaw said.
The teenager's mother, who RNZ agreed not to identify, said the school never took disciplinary action against her daughter, had not justified its decision and had refused mediation.
"The way it feels right now for us is that schools can be a law unto themselves and it doesn't matter if they don't even follow their own policies, they're not going to be held accountable for that, and ultimately we just want to be able to have a fair process," she said.
The woman said her daughter was likely to miss half a year of teaching in two subjects.
"Because of that, and the isolation of having to sit in the back room of a classroom with no teacher and nobody to ask for help, she feels like her learning is just going backwards and that's having a huge effect on her mental health as well as her achievement," she said.
Youth Law chair Simon Judd said it was frustrating the government had not yet acted on a long-standing undertaking to set up a panel.
"For every day, week, month that goes by that we don't have an ability to appeal against those decisions, you know, to have somebody have a second look at the decision which the school has made, is time where in my view students and families are suffering needlessly," Judd said.
Schools made decisions every day which had a big effect on students' lives and a panel would ensure young people were treated fairly, he said.
New Zealand's lack of a body to review schools' decisions was unusual among developed countries, he said.
"In other places, a significant number of decisions by schools that are challenged on appeal will be overturned," he said.
"It's not a question of schools acting in bad faith or dishonestly, it's simply that they get it wrong sometimes and we need a panel or a tribunal sitting above the schools to correct those errors."
Children's Commissioner Judge Frances Eivers said she was highly concerned the dispute resolution panels were still not in place.
The existing system effectively denied many children children their right to an inclusive education, Judge Eivers said, adding that without the panels, New Zealand was breaking domestic and international law.
"If a student and their whānau disagree with a decision, their only option is to either go to the Ombudsman - which can only make non-binding recommendations, which schools can choose to ignore; or apply for a Judicial review is expensive and time consuming," she said.
"Even if the whānau can afford the costs, all this time their mokopuna is drifting further and further away from the education system.
"This matters. We know that students who become disengaged from education face life-long adverse outcomes. Besides slipping behind academically, these students often become isolated, suffer mental health challenges, lack a peer group to both support them and curb anti-social behaviour.
"When we exclude children from school we are sending a message that they are not worthy, are not wanted. Once they believe that, we have lost them.
"As we condemn the young people undertaking 'ram raids', we need to ask ourselves why they don't care what others think of them. Perhaps at least some of them feel we have already cast them adrift.
"I want to see action. These panels are a necessity not a luxury."
Education Minister Chris Hipkins said the government was committed to setting up a disputes resolution process.
"The law change needed to establish this has been passed, and the government remains committed to establishing a disputes resolution process," Hipkins said.
"I can't comment further at this stage as all spending decisions are subject to the Budget process."