The state averaged 673 people in full-time custody per day in the June quarter, according to the Australian Bureau of Statistics.

That was an increase of 13 compared to the March quarter and a 21 per cent increase on the average of 555 for calendar year 2016.

Nationally, the ABS said the number of people in custody more than doubled in the 10 years to the June quarter, to a daily average of 43,306.

Tasmania had one of the lowest imprisonment rates in the nation and easily the lowest indigenous imprisonment rate.

The state's overall imprisonment rate in the June quarter was 160.5 prisoners per 100,000 adult population.

The national rate was 220.5.

The Tasmanian rate was much lower at 137.3 in 2016.

The new jail will be in Tasmania's northern half.

"Approximately 46 per cent of prisoners originate from the North or North-West of Tasmania or are required to appear in Northern or North-Western courts, providing much reason for this major infrastructure project," Corrections Minister Elise Archer said.

"The new $270 million northern prison is a key part of our long-term plan for Tasmania and will provide a large number of jobs during its construction and then once it is opened."

Ms Archer said prison populations across the country were increasing and Tasmania was not immune from the trend.

"Some jurisdictions have seen a doubling of their population, others have double and triple bunking as the norm," she said.

"Here in Tasmania, under our government, there has been considerable investment in both staff and infrastructure at the Tasmania Prison Service and we remain under capacity as a result."