Prime Minister Scott Morrison on Friday confirmed the 1000-bed facility would be constructed on the Commonwealth-owned land in Mickleham, next to an existing quarantine facility for plants and animals.

It will open when the first 500 beds are available.

'I have asked my officials to prioritise this project and I want to see that all efforts are made to deliver the first stages of the facility by the end of 2021," Mr Morrison wrote in a letter to Acting Premier James Merlino.

"A facility with a 1000-bed capacity will increase the number of Australians that can return to Australia and provide options to assist in our economic recovery by enabling arrivals of international students, skilled migrants and other economic intakes into the medium term."

The prime minister thanked Mr Merlino for the state government's co-operation and partnership in delivering the project.

Victoria had committed $15 million to get the project ready for construction.

The state government had estimated a 500-bed facility would cost $200 million.

Victorian Health Minister Martin Foley called the confirmation a positive development, but also fired a shot at the federal government.

"This would have been ideal 12 months ago - quarantining is a constitutional responsibility of the Commonwealth," Mr Foley said.

He said outbreaks with a link to hotel quarantine in Australia were now "in the mid-20s".

"We all know the history - the only solution to that is for the Victorian risks to be minimised by high-risk groups having dedicated, stand-alone facilities," he said.

"We are sure it will be be infinitely safer than the hotel quarantining efforts.

"The fact that it is really 12 months late is a disappointment, but 12 months late as opposed to delivering a project as soon as we possible can - we'll go for the 'as soon as we possibly can' option every time.

"This is all about reducing risk for our hotel quarantine system ... we welcome the partnership with the Commonwealth."

Australian Associated Press