Hobart's Waratah Hotel is being bought by the Hodgman Government for supported accommodation.
The Murray Street building will be housing the vulnerable next year after refurbishment plans pass through council processes.
Housing Minister Roger Jaensch says they're serious about alleviating the capital's homeless crisis.
"We'll be modifying the facility to provide around 24 ensuite units; they're for people who are homeless or at risk of homelessness and require supported accommodation," he said.
"It is intended to operate on a similar basis to supported accommodation facilities across the State such as Bilton Lodge, that have been offering stable, supported accommodation for over 10 years and have achieved excellent outcomes for residents."