The federal Minister for Housing will wipe Tasmania's $157 million housing debt to the Commonwealth.
Minister Michael Sukkar will be in Tasmania on Sunday with federal and state colleagues to announce the Federal Government will cancel the debt.
The move comes after a series of appeals from the Tasmanian Government, and bargaining by independent senator Jacqui Lambie.
The debt relief will free up $15 million per year in the state budget to spend in the housing sector, and will be welcomed by all attempting to deal with housing issues across the state.
In June state minister Roger Jaensch said the debt was "an issue for us, it is restricting our ability to respond to the need that we've got".
He said it could deliver an extra 50 houses a year.
Earlier this year Mr Sukkar, along with Prime Minister Scott Morrison, were tight lipped around whether they would cancel the debt.
The Senator clashed last week with Labor's spokesman Jason Clare, after he raised questions over the wait for an announcement.
MORE ON TASMANIA'S HISTORIC PUBLIC HOUSING DEBT:
Tasmania's housing debt stems from a loan partnership with the Commonwealth which assisted state public housing systems in the 1970s and 1980s.
The loan scheme was replaced with a grant scheme requiring no repayments, but Tasmania struggled to repay the original debt.