But Elise Archer has reiterated that no decision has been made to move the proposed Northern Regional Prison away from a site north of Westbury, which has been the subject of community opposition for two years.

The community consultation over Ashley would guide the government's decision on whether to move the proposal from the site near Westbury.

She made the announcement on Thursday morning, outlining the government's intention to consult with the Deloraine and surrounding communities before making a decision.

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The government had been criticised by members of the Westbury community for a perceived lack of consultation in choosing the initial site in an industrial estate, and then moving it further up Birralee Road.

Ms Archer said the government could see the potential for Ashley.

"While no decision has been made on moving the Northern correctional facility, an initial evaluation indicates the AYDC site is well suited for a modern, state-of-the art correctional facility in Northern Tasmania with a rehabilitative focus," she said.

"I re-emphasise that no decision has been made and our focus is purely on what the community's view is on the use of the AYDC site."

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Ashley's use as a youth detention centre will be phased out within three years, although infrastructure upgrades will continue.

The government will also provide $50 million for a new maximum security unit at Risdon Prison to "alleviate the immediate bed pressures that exist for the most serious offenders".

It was unclear how this extra unit would impact the Northern Regional Prison plans, but Ms Archer emphasised the Northern prison would have a "rehabilitative focus".

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She said the community would have a chance to have its say.

"The initial engagement focus will be with the immediate neighbours, followed by feedback from the broader Meander Valley and surrounding communities," Ms Archer said.

"Following this process, the Government will then decide whether to move the correctional facility to the AYDC site or to continue on the existing site at Birralee Road."

Consultation will include a "shop front" in Deloraine, a dedicated website and opportunities for public submissions by phone, email or in writing.

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