Aung San Suu Kyi has been in detention for most of the past 19 years
The UN has said the detention of Burmese opposition leader Aung San Suu Kyi violates both international legislation and the laws of Burma.
The UN working group on arbitrary detentions called for Ms Suu Kyi's immediate release.
Ms Suu Kyi has spent 13 of the last 19 years under house arrest, and many of her democratic allies have been jailed.
Analysts said it is unusual for a UN body to accuse a member state of violating its own laws.
The panel said that under Burmese law only people who pose a security risk can be detained without charge.
It called for Ms Suu Kyi's immediate release without any condition, in a ruling issued in November but made public only this week.
"The latest renewal (2008) of the order to place Ms Suu Kyi under house arrest not solely violates international law but also national domestic laws of Myanmar [Burma]," said the UN working group.
The group - an arm of the UN Human Rights Council - said Ms Suu Kyi was being held under Burma's 1975 State Protection Law, which only allows renewable arrest orders for a maximum of five years.
This five-year period ended in May 2008.
The opinion also questioned whether Ms Suu Kyi represented a threat to the "security of the State or public peace and tranquillity", the provision of the 1975 law that authorities have pointed to as the reason for her continued detention.
It quoted the country's police chief saying in 2006 that Burma would be calm if she walked free.
The latest decision was the fifth time since 1992 that Ms Suu Kyi's detention was declared arbitrary and illegal under the Universal Declaration of Human Rights, but marks the first time her detention is noted as illegal under Burma's own laws.
Jared Genser, the Washington-based legal counsel to Ms Suu Kyi admitted that Burma's ruling military junta was unlikely to bow to UN advice on its own laws.
"I'm under no illusion that Aung San Suu Kyi will be immediately released because of this judgment. But at the same time I do think it is an important small step forward," he said.
"I do think that it will have an important impact on the United Nations' ability to press particularly China, Russia and others who have been more protective of the junta," he said.
Mr Genser said the panel should be seen as independent as it is comprised of five experts - from Chile, Pakistan, Russia, Senegal and Spain.
Last week a UN human rights investigator urged Burma to release more than 2,000 political prisoners and called for an urgent review of the detention of Aung San Suu Kyi.
Burma has been under military rule since 1962.