Tasmania has formally lodged its expression of interest to scuttle a decommissioned Navy vessel off the state's East Coast.

It will be competing with regions including the Gold Coast for HMAS Tobruk, which would be used as a dive wreck.

Proponent Peter Paulsen says Skeleton Bay near St Helens is an ideal location for the 120-metre ship.

"The HMAS Tobruk will be decommissioned in 2015 and we believe it would make an absolutely unbelievable dive wreck for this area."

Nick Crawford from the St Helens Business Enterprise Centre says the region desperately needs a new tourist drawcard.

"Every state in Australia's got one except Tasmania and many countries around the world have got them as well and they become valuable sites for not only diving but also research as well," he said.

"We're hoping to populate the vessel with all sorts of tanks and ex Army paraphernalia so you can imagine a group of divers going through the inside of the vessel with torches, coming across all these interesting things that they won't have seen anywhere else and then popping out the other side."

The new Liberal MP for Lyons Eric Hutchinson says the Federal Government will consider providing $10 million to sink the ship if there is broad community support, and a feasibility study shows the business case stacks up.

"I will go in and fight for them in the ways that I have with the support I hope of the State Government to see this located in North-East Tasmania," he said.

Proponents need $60,000 to test the feasibility of the venture but not everyone supports it, including Todd Dudley of the North East Bioregional Network.

"From a conservation point of view I think the integrity of Skeleton Bay would be better served by leaving it as it is," he said.

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