Victoria's plan for a quarantine centre in Melbourne's north has been met with some openness from federal Health Minister Greg Hunt, while his colleague Peter Dutton has derided the project.
Mr Hunt said the federal government was just learning details of the proposal but it was being considered.
"There are many elements that are somewhat of a surprise. It wasn't a Commonwealth proposal even though it's on Commonwealth land," he told reporters in Melbourne on Friday.
Community support for it would be an important factor, the minister said.
"We'd be interested to know what support there is."
The proposed 500-bed centre on Melbourne's northern fringe, announced by the state government on Thursday, needs $200 million in federal funds, with the state chipping in $15 million for design and planning.
Mr Dutton had earlier on Friday rejected the idea, prompting state MP Lily D'Ambrosio to fire back that quarantine is a Commonwealth responsibility and Canberra should not "shirk" its obligation.
"I have seen some political smoke and mirrors over my time and I think this is right at the top of the list," the defence minister told the Nine Network.
Mr Dutton said aside from some "small blips", the existing hotel quarantine system had allowed 500,000 people to enter Australia safely during the global coronavirus pandemic.
"Hotels are working very well," he said.
"They are able to be scaled up. It gives us the ability to bring people in, quarantine them and send them back home to get on with their lives."
Ms D'Ambrosio said it should come as "no surprise to anyone" that the Victorian government was investigating the construction of a COVID-19 quarantine facility and it would keep engaging with Canberra on funding.
"Canberra can't shirk its responsibility when it comes to quarantining," she said.
"They simply can't wish away, or with some careless words, hope away that responsibility."
Hume City Council, which has the proposed Mickleham quarantine site in its area, has requested an urgent meeting with the state government about what impact the centre could have on local residents.
"Council has not been consulted on the proposal prior to ... (the) announcement and seeks clarification about the ongoing management of the facility," it said in a statement.
Ms D'Ambrosio said local residents would have the opportunity to talk to the state government about the proposed facility.
Deputy federal Labor leader Richard Marles also said hotels were not fit for purpose and quarantine was the federal government's job.
Mr Marles noted hotel quarantine leaks had caused major state capitals to be shut down at huge economic cost.
The debate comes after Melbourne residents in a number of northern and western suburbs were told to get tested for COVID-19 after "strong and unexpected" fragments of the virus were detected in wastewater.
Some 246 people in Melbourne's western and northwestern suburbs have been contacted by authorities.
The Australian Medical Association's Victorian president Julian Rait said the detections could mean they've had an infection recently and recovered, are no longer potentially infectious and still shedding the virus.
The 246 people who were contacted include four close contacts of the positive case and 242 recently returned red and orange zone travel permit holders.
While they recently returned negative results, the department wants them tested again.
Meanwhile, a seventh Victorian vaccination centre will open on Tuesday in Cranbourne in Melbourne's outer southeast.
All Victorians over 50 will be eligible for an AstraZeneca jab from Monday.