Each year the state pays back $15 million to chip away at the $157 million still owed to the federal government which will take until 2042 to be paid off.

RELATED: Door left open for further discussion on cancelling Tasmania's $157 million housing debt

Tasmania has been lobbying for many years to have this debt cancelled and state Housing Minister Roger Jaensch is now making his case for wiping the debt in a bid to instead use the funds to address housing stress across the state.

Tasmania's housing debt stems from a loan partnership with the Commonwealth which assisted state public housing systems in the 1970s and 1980s.

In the mid-1980s, the loan system was replaced with a grant scheme that no longer required repayments, however, between all the states and territories the combined total the federal government is still owed from the loans is almost $2.2 billion.

University of Tasmania's Institute for the Study of Social Change director Dr Richard Eccleston said there was precedent for wiping the debt because South Australia had its debt waived towards the end of the Gillard government in 2012.

"Given the fact that there is need for increased investment in social and affordable housing and precedent in South Australia I think (wiping the debt) is a reasonable request to make," Dr Eccleston said.

"It delivers better social outcomes and saves state and Commonwealth money in the longer term."

Dr Eccleston said the state was paying $8 million a year off the principal loan and $7 million a year in interest.

"That's nearly half of the regular state social housing budget. It's a big imposition," he said.

Mr Sukkar said wiping Tasmania's housing debt would have national implications.

"If the Commonwealth government was to extinguish the debt for one state or territory, it would be very, very logical for other states and territories to ask for the same," Mr Sukkar said.

Mr Sukkar said New South Wales owes almost $900 million, Western Australia nearly $350 million and South Australia $189 million.

Victoria is the only state to have paid off its housing debt.

Mr Jaensch will take a proposal back to Mr Sukkar in Canberra, seeking both to manage Tasmania's debt and implement short term housing stress initiatives, "in the coming weeks."

Mr Sukkar said he had not ruled out cancelling the debt.

"I'm happy to have the discussion again with Minister Jaensch, I'm happy to consider any proposals brought forward," Mr Sukkar said.

Mr Jaensch said on Thursday the federal minister's willingness to keep the discussion open was a positive step forward, given the Commonwealth's firm rejection of previous requests.

However, Mr Sukkar said any decision made about the debt would form part of a longer term budgetary process.

In the meantime, Mr Sukkar said he planned to see Tasmania prioritised for grants from a $1 billion infrastructure fund, having asked the chief executive of the National Housing Finance Investment Corporation to come to Tasmania next week to meet with Mr Jaensch.

"I'm not suggesting the full billion would be spent here, but its a first-in best-dressed fund, and Tasmania's really well placed to get access to it," he said.

Dr Eccleston said wiping the debt was not the only option on the table.

Reducing the interest rate from 4.5 per cent, to perhaps 2 per cent which is rate the Commonwealth borrows at, or having a moratorium on payments while Tasmania was under acute housing pressure were two alternatives, Dr Eccleston said.

"I don't think necessarily the loan should be forgiven with no strings attached, but I think that extra money could be used in innovating ways which would lead to better long-term solutions," he said.

Tasmania receives $30 million dollars a year from the Commonwealth, of which, it hands back almost half in order to repay the housing debt.

Mr Jaensch said the annual savings made from not paying back the loan would allow an extra 50 houses per year to be built.

The Salvation Army said $15 million would support services such as:

Shelter Tasmania executive officer Pattie Chugg has been calling for the relief of Tasmania's public housing debt for many years which she said has been a drain on the system since the 1980s.

"It means $15 million more each year to help house people and people who are homeless," Ms Chugg said.

"We are a special case here in Tasmania because our proportion of debt is higher than any other state or territory. It's unhealthy debt."

Housing Choices Tasmania state manager Kim Bomford said the Commonwealth would need to do a cost-benefit analysis between leaving this "random debt" hanging over the state's head and securing housing for the most vulnerable.

"It's not like a mortgage," Ms Bomford said.

Dr Eccleston said there was a compelling case for wiping the debt in order to invest more in social housing.

"If people don't have access to secure housing there are a whole range of knock on effects in terms of the health system, the justice system and education outcomes," Dr Eccleston said.