Darwin is set to replace Christmas Island as Australia's central place for housing asylum seekers.
Plans have been announced to add 1,900 new beds to the Northern Territory capital.
This will take Darwin's immigration detention capacity to 2,900, eclipsing Christmas Island's ability to hold 2,600.
Immigration Minister Chris Bowen said new beds would be made available on the Australian mainland in a bid to relieve pressure on Christmas Island.
A plan for a new 1,500-bed facility at Wickham Point to house single men was announced late on Thursday.
The first 500 places at the $9.2 million centre are expected to be ready by mid-year.
The centre, in an industrial area 35 kilometres south of Darwin, will be staffed by mental health experts and doctors.
The privately-leased operation replaces a previously announced $185 million proposal to have asylum seekers kept at 11 Mile Antenna Farm, near Darwin.
Another 400 detention beds will also be added to the Darwin airport lodge centre by June, effectively doubling its present capacity.
A spokesman for Mr Bowen said that while Darwin's capacity would increase, there was no timeframe for the expansion.
Mr Bowen has also announced that Scherger RAAF Base near Weipa in Queensland, with a capacity for holding 310 people, will have its life extended for another year to June 2012.
Opposition immigration spokesman Scott Morrison said the government was embarking on a detention bed binge.
"Their only response is to build more beds. It's the polar opposition to what the Prime Minister (Julia Gillard) was telling people to believe at the last election."
But he declined to say if the Christmas Island facility should have been expanded instead.
"They're decisions for the government to make. I haven't been briefed by the government," Mr Morrison told AAP.
By mid-year, Virginia Palms in Brisbane and Darwin's Asti Hotel will stop housing asylum seekers.
The government has also reversed a decision to expand the Melbourne Immigration Transit Accommodation so it can house more families and minors.
"The government's decision to move children and vulnerable families into the community makes expanded use of the facility unnecessary at this stage," Mr Bowen said.
The Refugee Council of Australia said that while detention in Darwin was preferable to Christmas Island, it was disappointed that mandatory detention was continuing.
"We think it's a missed opportunity," spokeswoman Sophie Peer said.
"The government needs to be looking for alternatives, not beds."
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