West Wimmera Council has written to the Federal Immigration Minister Chris Evans urging him to consider building a local immigration centre rather than a costly one overseas. 

"If a large capital investment is to be made in the housing of these people, why not do it on Australian soil so the benefits flow to our communities," West Wimmera chief executive Jim McKay said in the letter.

The shire's biggest town, Edenhope, has about 900 people and West Wimmera Mayor Ron Hawkins said a detention centre would create much-needed jobs.

"If our towns are going to survive we need jobs. We have wonderful schools and hospitals and the infrastructure is in place for three or four times the number of people," he said.

 "At the moment we just want to find out the facts.

"We won't be building a centre tomorrow.

"The area is crying out for this sort of fresh investment as it would bring young people and jobs."

In the past 15 years the area's population has fallen 35 per cent and it now has one of the highest average ages in the state.

Local businessman Trevor Bennett said it was a good initiative by the council to try to breathe life into the area.

"We need to do something to get jobs into the area," he said.

A number of other Edenhope locals also supported the move to at least find out what the options are before making a final decision.

Dick Stringer, the owner of Edenhope Motor Inn, said it could be a positive opportunity.

Since Labor came to office, almost 150 boats have arrived in Australian waters, forcing a huge blowout in the estimated cost of detaining asylum seekers.

And last week, with the Government's push for a refugee processing centre on East Timor in doubt, Mr Evans admitted the asylum seeker issue was "killing the Government".

But last night a spokesman for Senator Evans said the Government had no plans to build a detention centre within the Wimmera Shire.

"The Gillard Government is focused on delivering a sustainable, regional solution and wrecking the business of people smugglers," he said.

"We are currently engaged in discussions with our partners in the region about establishing a processing centre in the region as part of a regional protection framework."

Opposition immigration spokesman Scott Morrison also ruled out the idea.

"Our goal is to put the detention centre business out of business," he told the Herald Sun. "The Coalition has no plan to build any onshore detention centre. We'll open one offshore."

But Mr Morrison said the Coalition would try to help towns far from the big cities by encouraging regional resettlement of refugees.

King Island in Bass Strait has also floated the possibility of housing an off-shore asylum seeker processing centre.

Some locals were unenthusiastic about the idea.

"I don't think it will ever happen. How would they get them here for a start," said Jerry, a labourer who grew up in the Wimmera and has lived in the town for the past 12 years.

"Anyway, it wouldn't bring that many jobs. They'd probably build it out of demountables bought from Geelong and Ballarat.

"And a lot of the asylum seekers have been through a lot, so they should just let them free anyway."