The study found that cyberbullies were more likely to use cannabis and fall into crime and violence, their victims more likely to be depressed and inflict self-harm, and those who both bully and are bullied to binge drink, face suspension from school, harm themselves and suffer from depression.
Almost three-quarters of the children in the study had engaged in some form of bullying in the past two months, with boys surprisingly more often backstabbing, spreading rumours and using other "covert" forms of bullying.
"Covert bullying was always thought to be predominantly done by girls, but our figures show for the first time that boys are actively engaging in this behaviour," Hemphill said.
"These findings will have an impact in terms of the way we think about how we might prevent bullying."
More than a quarter of boys and 14 per cent of girls in Year 9 had engaged in traditional bullying in the past 12 months, with more girls than boys among their victims.
But children were less likely to be a victim of traditional bullying in Year 9 if they were well connected with their family in Year 7 and were among a good peer group.
The study found victims of traditional bullying were also more likely to be victims of cyberbullying, with 14 per cent of boys and 15 per cent of girls admitting to cyberbullying in the past year.
It said far more girls were victims - 21 per cent, compared with 12 per cent of boys.
Hemphill also said international studies had shown that despite conventional belief that bullies suffered from low esteem, many of the ringleaders instead had inflated views of themselves.
She said increased focus on self-esteem, especially by parents trying to protect and strengthen their children, was instead convincing young people they were special, unique and with a right to do anything they wanted.
Meanwhile, a national move against bullying in the workplace is growing after the introduction of "Brodie's law" in the Victorian Parliament, proposing sentences of up to 10 years' jail for workplace and cyber bullies.
The bill is named for 19-year-old waitress Brodie Panlock, who jumped to her death from a carpark after unrelenting bullying by colleagues at Melbourne's Cafe Vamp in 2006.
She was abused, insulted, humiliated, spat upon, told to eat rat poison and even drenched in cooking oil. Four tormentors and the cafe were fined more than A$330,000 ($406,000).
Outrage after her suicide led to legislation that may now become a model for nationwide laws.
Gillard this week announced a parliamentary review to examine the nature, causes and extent of workplace bullying.
