AFL football will go to Bellerive Oval, but without any taxpayer money to prop it up.
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After a week of pressure from both ends of the state, Premier Lara Giddings announced that two games would be played at Cricket Tasmania's ground in the South.
However, she said the deal would be funded by a third party and would involve no state government cash.
"I have been upfront about the financial challenges we currently face and I have decided that we cannot fund AFL games from the state budget at a time when we are asking all departments to find significant savings," Ms Giddings said.
"However, I also recognise the wider economic benefits that additional AFL games could bring to Tasmania, which is why I have been exploring other funding options over the past week."
Federal Group spokesman Daniel Hanna ruled out the hotel company stumping up the $500,000 required to bring two North Melbourne games to Hobart.
Ms Giddings also said the government would not be putting in the money for a $21 million upgrade of Bellerive Oval, but both Bellerive and Aurora Stadium could be upgraded down the track.
She said it was important that the state did not lose the opportunity to bring AFL football to the state's South.
Ms Giddings said she was hopeful of signing a deal with a third party in a couple of days, and she had been in discussion with a number of parties.
Cabinet delayed a decision last week on whether to fund the games, but Ms Giddings's announcement meant cabinet would not have to consider the issue today, as no state money would be used.
Greens leader Nick McKim said the outcome was a "win- win" as games would go ahead but the state budget would not be affected.
"In tough budget times, we have to make sure that the state budget is prioritised to delivering core services to Tasmanians," he said.
A Greens spokesman was unable to confirm whether Mr McKim and Cassy O'Connor had attended cabinet to discuss the football issue last week.
Opposition leader Will Hodgman called on Ms Giddings to release the details of any deal as soon as possible.