The facility at Pontville, about 30km outside Hobart, would house up to 400 single adult men, Immigration Minister Chris Bowen said.
The facility would be up and running next month and would initially house 250 people, Mr Bowen said.
It will cost the Department of Immigration and Citizenship $15 million to upgrade the facility for use.
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The announcement comes as the government moves to ease overcrowding at the Christmas Island Detention Centre.
The Pontville centre - consisting mainly of Army dormitory buildings - was a short-term response while work is completed on new detention centres at Wickham Point in the NT and Northam in WA, Mr Bowen said.
"The government has acknowledged the pressures on our detention facilities and this new accommodation will help to relieve the strain on the system," Mr Bowen said.
"Following the incidents and loss of detention capacity at Christmas Island, Pontville presents an appropriate contingency option for detention accommodation."
The centre was expected to be operational for about six months, Mr Bowen said.
