ACT Health Minister Simon Corbell welcomed the start of work on the $43.5 million Mugga Lane facility, expected to provide 25 overnight in-patient beds when operations commence in late-2016.

The unit will be opened in a staged process with capacity growing in line with in the need for secure care in the territory. It will include specially designed security features and will have guards working on site.

Mr Corbell stressed the facility would house a small number of patients.

Final designs for controversial and long running project, first proposed as far back 2007, were approved through special fast-track planning laws passed by the Legislative Assembly in June last year.

Nearby residents have long opposed the site choice for its proximity to homes and concerns over insufficient community consultation by the government and former health minister Katy Gallagher dating back to 2010.

Magistrates, lawyers and mental health advocates have been calling for a secure mental health facility to be built for years, to avoid people with mental health concerns being held in inadequate conditions.

Mr Corbell said on Monday the new facility would include 10 acute care beds and 15 rehabilitation beds.

"It is a very important investment in mental health services for our community, for people caught up in the criminal justice system and needing a secure place for their care and rehabilitation outside of the prison environment.

"It's been well recognised now by our courts and by our health system for a long time that we need a dedicated facility for people with mental illness that's separate from the prison but also separate from the general hospital system," he said.

Mr Corbell welcomed the former Quamby Youth Detention Centre site for its access to hospitals and the Alexander Maconochie Centre, adding that the area's natural environment would provide a calm and restorative setting for the unit's clients.

"This facility gives us that capability, recognising that people with serious mental illness and potentially facing, or convicted of, effectively serious charges in the criminal justice system need a place to be cared for," Mr Corbell said.

"We've gone through a long journey, both determining the model of care and engaging with the community, and getting tripartisan support to give this project priority to allow it to be built."

In November 2013, the ACT's Public Advocate warned of the risk of too many types of patients would be held in one facility. Anita Phillips criticised a "one size fits all" approach, including over concerns about separation of men and women.