Facebook has monitored the posts of Australian children and used algorithms to identify and exploit them by allowing advertisers to target them during their most vulnerable moments.

Internal documents outline how the social network can target "moments when young people need a confidence boost" by monitoring posts, pictures and interactions, Sky News reported on Monday.

Facebook collects the information on a person's moods including feeling "worthless", "overwhelmed" and "nervous" and then it divulges the same to advertisers who use it to target them.

Facebook's tactic violates the Australian Code for Advertising and Marketing Communications to Children guidelines.

The revelation also points towards the how Facebook can be used for covert surveillance which most of the social networking sites claim to be fighting against.

Facebook has admitted that it was wrong to target the children and apologised for the same. The company has also ordered an investigation.