The US Fair Labour Association was asked by Apple to review the factories run by Foxconn after criticism of poor working conditions, including reports of low pay and long hours.
Over its month-long investigation, the FLA said that it had found evidence of excessive and often unpaid overtime; "several" health and safety risks; and "crucial communication gaps" that resulted in a sense of unsafe working conditions among Foxconn employees.
However, the non-profit body said that it also secured commitments that Foxconn will reduce working hours to legal limits while protecting pay, improve health and safety conditions, and establish a "genuine voice for workers".
"Apple and its supplier Foxconn have agreed to our prescriptions, and we will verify progress and report publicly," said Auret van Heerden, the president and chief executive of the Fair Labour Association.
Apple said that it "fully accepted" the report's recommendations.
A statement added: "We share the FLA's goal of improving lives and raising the bar for manufacturing companies everywhere."
The findings emerged after Apple chief executive Tim Cook visited a massive new iPhone factory run by Foxconn as part of his visit to China.
Foxconn hit the headlines after a string of worker suicides put the spotlight on conditions in its factories, where pretty much all of Apple's product lines are made.
After worldwide pressure from consumer and action groups, Apple agreed for the FLA to run an independent investigation of three facilities run by Foxconn.
In a statement, the FLA said that it had observed various "serious issues" at the factories investigated, including problems with health and safety, worker integration, treatment of interns and working hours.
The investigation revealed that over the last 12 months, workers at all three Foxconn factories regularly exceeded 60 hours' work per week, particularly at "peak production periods" such as new product launches.
Some workers were doing more than 80 hours a week, and there were periods when employees would do more than seven days in a row without having the required 24 hours off.
Surveys of the workers revealed that 64% felt that their pay did not meet their basic needs, including persistent complaints that overtime often went unpaid.
Some 43% of employees claimed to have experienced or witnessed an accident at the plants.
Foxconn has now agreed to brings its factories into compliance with Chinese employment standards by 2013, with workers limited to a 49-hour working week, including overtime.
The company has also agreed to improve the compensation package for workers. Average monthly salaries at the three factories ranged from $360 (£227) to $455 (£289), but Foxconn recently raised salaries by up to 25%.
Foxconn has already taken steps to improve safety at its facilities, said the FLA, including a reduction in the risks posed by aluminum dust where Apple products are made.
To create effective worker representation, Foxconn has agreed to ensure elections of worker representatives "without management interference", and it will adapt its internship programme to "ensure that interns enjoy the protections necessary for a productive, healthy and safe educational experience".
"If implemented, these commitments will significantly improve the lives of more than 1.2 million Foxconn employees and set a new standard for Chinese factories," van Heerden said.
The FLA will follow up its investigation by verifying Apple and Foxconn's implementation of their remediation plans, and will report publicly on progress.
However, Labour unions have already expressed concern that the two companies could fail to meet their commitments.
SumOfUS.org, a coalition of trade unions and consumer groups, said: "The report will include new promises by Apple that stand to be just as empty as the ones made over the past five years."
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