Veterans' Affairs Minister Guy Barnett announced on Friday, following an expression of interest process, the Vietnam Veterans Association of Australia Tasmania branch had been named the successful receipt of the Veterans' Retreat Project grant.

"The VVAA will receive $100,000 to lead the development of a retreat by renovating a former Tasmanian Parks and Wildlife Service shack at the lake," Mr Barnett said.

"It is admirable that the VVAA has taken on this project for the benefit of our veterans.

"The project aims to provide veterans and their families with a retreat at Lake Sorell which supports positive mental health and well-being outcomes.

"When complete, this highland retreat will make an important contribution to the health and wellbeing of our veterans, offering a place for them to heal, recover and reconnect."

VVAA Tasmania president Terry Roe said he was delighted the organisation was able to support this project.

Mr Roe said the goal was to finish the refurbishment in about 12 months.

"It's currently two bedrooms. A carport will be turned into two additional bedrooms. The whole place will be basically gutted - new kitchen, new lounge, new bathroom facilities," Mr Roe said.

"It's going to be a very comfortable, very warm, relaxing retreat for our contemporary veterans and serving men and women."

East Timor and Afghanistan veteran Philip de Bomford said the retreat would get a lot of use, particularly by the younger generation of veterans.

"It's a vital asset for helping our mental health to come up to a place like this that's serene, where you can get away from the hustle and bustle," Mr de Bomford said.