A northern prison is expected to create a $500 million economic boost for the region, but support services say the focus of the project needs to remain on rehabilitation.
It was revealed last year nearly half of the state's prisoners end up back behind bars after being released, with questions raised over the rehabilitation programs offered to those in custody at Risdon Prison.
The new Westbury-based prison would house inmates from the North and North-West regions, rather than transporting them to Hobart - which is expected to give them greater access to their families, and outside support network.
Rosalie Martin, who delivers literacy programs at Risdon, said maintaining family connections was "one of the most powerful supports in moving people away from crime and away from recidivism".
The 2017 Tasmanian Australian of the Year said the northern prison development was an opportunity to create a facility that truly focused on "the individual", and the root of their offending.
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"Overall I think as a society, we should be transitioning towards less prisons," Ms Martin said.
"The situations that lead people to prison come out of poverty, disadvantage and trauma.
"There is a small percentage of people who, because of the complexity of their circumstances, will need to be incapacitated to make society safer."
Salvation Army Northern Tasmania social operations manager Anita Reeve agreed continuing current support services for prisoners at the new site was "most important".
The Salvation Army has a prison support worker who is based out of the North, as well as a chaplain who volunteers their time at the Launceston Remand Centre.
"It really is about providing support for them to integrate back into the community," Ms Reeve said.
"Certainly having a prison in the North as far as families being able to access visitation will be great, but we always see prison as a last resort, and hope there are other support services in place.
"The Salvation Army would prefer the government be tougher on the causes of crime, rather than waiting for the outcomes, so they reduce recidivism and in doing so reduce prison population. This would mitigate the need for a second prison."
Corrections Minister Elise Archer confirmed the new prison would include current rehabilitation programs offered at Risdon, as well as additional programs.
"Stage 1 of the new Northern Regional Prison is scheduled to be operational in 2025 and the government will ensure that a variety of rehabilitation and training programs are available to prisoners," she said.
"The recently released Social and Economic Impact Study reveals that the proposed Northern Regional Prison will generate a range of important benefits to the North and North-West of Tasmania.
"According to the study, this includes improved inmate rehabilitation driven by increased connectedness between inmates and their families during incarceration, which will lead to a reduction in crime with an economic benefit of $29.4 million to the north and north-west regions in this regard."