Tourism Minister Michelle O'Byrne informed staff at the Transit Centre office that the business was no longer viable, with predictions of a $3 million loss this financial year and up to $10 million in losses in the coming years.

The business will close on September 30 if a buyer cannot be found through a public tender process, which will start soon.

Ms O'Byrne said Tasmania's Temptations was generating $52 million in sales in 2004 but it had since fallen by $40 million.

Of the 2300 tourism operators around the state, only 420 were intermittently using the service.

"People are not booking their holidays through this mechanism the way they have in the past," she said.

Despite pleas from the tourism industry to maintain funding for the department, the Government is battling to deal with a massive budget deficit and has not ruled out any more job cuts. "I'm not in a position to do that," Ms O'Byrne said.

"Clearly with the global financial crisis we are looking at all impacts on the Tasmanian Budget.

"I am working to preserve as many jobs as possible but if I continue to sustain a loss of $3 million, then the impact on the broader tourism budget would be severe."

Tasmania's Temptations staff have been offered redundancy options.

Ms O'Byrne said the Government would attempt to redeploy staff within state or Commonwealth public service if they were not able to take a redundancy or find new employment.

Twelve jobs would be on offer in a customer contact centre to support the tourism industry, which will open in the existing Tasmania's Temptations office on July 1.

Ms O'Byrne said Tasmania's Temptations staff had been aware of the declining sales for some time but it was still difficult to tell them of the divestment.