Ainslie Village is considered an outdated model, lumping disadvantaged people together in shared accommodation, and the government has set aside $350,000 the coming 12 months to look for alternatives for the tenants and for others in supported accommodation.

Housing director Louise Gilding stressed no decisions had been made to move the tenants and nothing was likely to happen in the next two years or more, with the government re-signing an agreement last year with Argyle House to mange the site. The agreement lasts til June 2019 with an option for two more years.

"I don't want to create uncertainty for these people. They have a home, that's their home for the foreseeable future," Ms Gilding said.

But Ainslie Village was an outdated model for people with high needs and did not lend itself to "good life outcomes".

The buildings were also reaching the end of their lives.

"The infrastructure is old and ageing, the need is complex," she said.

"We need to do the piece of work that says how do we best support these people? ... We need to look at this cohort of people with complex needs and understand what their needs are first then understand what the built form is that suits those needs."

The village, which backs on to Mount Ainslie, was built in the 1940s, originally as military barracks, and has also been used for construction workers, migrants and homeless housing. It has been community housing since 2005.

It has 23 properties, in group living units housing four, eight or 12 people each, with shared kitchens. Ninety-three per cent of the tenants at the moment are single men, and most have a dual diagnosis, such as mental illness along with drug or alcohol problem.

The government says Ainslie Village "tends to attract individuals with a range of complex issues".

Tenants must meet low income tests to qualify to stay at Ainslie Village, and Argyle collects the rent, which is capped at 25 per cent of income, plus money from the Commonwealth under its rental assistance scheme.

The contract with Argyle Housing refers to tenants being referred from the prison, from Samaritan House and from homelessness services. The site also has a sobering-up shelter.

The Ainslie Village site is next door to Campbell High School and to a big new housing development planned by Doma. Doma has applied to demolish the former CSIRO headquarters and plans as many as 457 apartments in an eight-storey development.

Ms Gilding said the decision to look at new options for Ainslie Village was not related to the proximity of the school or the new apartment development. Rather, it was about the age of the buildings and the outdated model of care.

The 2017-18 budget says the government "will undertake planning to inform the future design of accommodation and support requirements for clients with high and complex needs. This will focus on social inclusion, life outcomes and wellbeing for vulnerable individuals who are at significant risk of homelessness."

Ms Gilding said the first task was to talk with the tenants over the coming 12 months to understand what kind of support they needed and to investigate the best models.

The government is looking at models around the country, including My Home in Queanbeyan, run by the Uniting Church, in which people live in shared, supported accommodation in small groups.