Premier Peter Gutwein said the government had taken out a number of leases on apartments and hotel rooms to place people in appropriate self-isolation.
The news came on the same day Australian Medical Association state president John Burgess demanded further options be considered for people with, or at risk of contracting, coronavirus to assist in their recovery and minimise spread.
Professor Burgess said some people needed to be supported medically in quarantine while outside hospital.
Coronavirus: All the latest updates on COVID-19 for Tasmania
He said some people might not need hospital care but also might not want to be at home.
"I'm sure that between government, the health system, and between industry and accommodation services in the state, we'll be able to work out the necessary details," Professor Burgess.
Mr Gutwein said work was already underway to provide infectious people with accommodation options other than hospital or the home.
"We have sufficient rooms available to us to ensure that should we need to self-isolate people that can't self-isolate at home, we can place them," he said.
Labor leader Rebecca White said the proposal was the best way to ensure infected people were not spreading the virus.
Our hospitals are already at capacity and more is urgently needed to ensure Tasmanias health system can cope in response to the threat of COVID-19," she said.
Tasmanias hospitality sector has been hard hit with the cancellation of large events and non-essential travel, and hotel vacancy rates are high."
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Greens health spokeswoman Rosalie Woodruff said medi-hotels should only be used voluntarily by people with infections who were otherwise well as many would be able to effectively and appropriately self-isolate at home.
She said for those that could not, the proposal would allow people to be properly cared for.
"We have got to be looking at prevention rather than the cure in this situation because the disease itself can be so serious," Dr Woodruff said.
"Once the growth of cases occurs at the rate it is in other parts of Australia, it will be a truly difficult time for Tasmanians and hospital workers."