Federal Health Minister Greg Hunt announced on Saturday that $160 million would go towards a new national psychosocial measure for people with severe mental illness.

It follows an agreement between states and territories, in which each government promised to match the $80 million put forward by the federal government.

Tasmanian Health Minister Michael Ferguson said the state government was “proud” to be contributing to the measure.

“Mental health is a priority for the state government and we will continue to support these sorts of initiatives, along with our federal colleagues,” he said.

“This new funding will complement the $95 million mental health plan we are rolling out, which will deliver 25 new community-based mental health beds and specialist inpatient child and adolescent mental health facilities for the first time ever.

“Importantly, this initiative allows individuals to receive assistance and rehabilitation in their own communities.”

Tasmania’s funding will be provided to Primary Health Networks to complement existing funding.

Responding to the announcement, Labor's health spokeswoman Sarah Lovell said she was cautiously optimistic about the funding.

“Given Tasmania’s high rate of suicide and comparatively very low number of mental health professionals in many of our regional areas, this funding is of course welcome,” she said.

“However, we remain concerned that this will not go anywhere near addressing the need, and leave many Tasmanians still at risk of falling through the gaps in service provision.”

Mr Ferguson said the measures will provide funding for people with severe mental illness, who are not more appropriately supported through the National Disability Insurance Scheme.