The Virginia Palms Motel in Boondall.

The four-star Virginia Palms Motel in northern Brisbane boasts "luxurious accommodation" in brand new self-contained apartments surrounded by 10 acres of lush, tropical gardens.

It also currently houses nearly 80 asylum seekers.

The Boondall hotel has reportedly been awarded a $1.2 million government contract for at least six months to accommodate the group of asylum seekers, understood to be from Afghanistan.

A two-bedroom self-contained apartment at the motel would normally cost holidaymakers $240 per night.

The federal Department of Immigration would not confirm details of the contract this morning, describing the matter as commercial in confidence.

However, the government defended the decision to house asylum seekers in a four-star motel, saying it was the only appropriate means of housing vulnerable women and children outside a detention centre.

"We don't think they should ever be put behind razor wire," Small Business Minister Craig Emerson told Sky News today.

"These are very vulnerable families with children and it's something that needs to be done on a short-term basis."

But Family First senator Steve Fielding said the move would only encourage more unauthorised boat arrivals.

"First it was Hotel Christmas Island, now it's Hotel Queensland," Mr Fielding said in a statement.

"There is no way we should be detaining asylum seekers in hotels because it just gives the people smugglers an extra selling point.

"Most Australians would be shocked to know there's a budget blowout of $200 million for dealing with asylum seekers."

The motel's website says it provides "luxurious accommodation" in Boondall, 13 kilometres from Brisbane Airport and three kilometres from Brisbane Entertainment Centre.

Department of Immigration spokesman Sandy Logan told ABC Radio this morning the group of asylum seekers was under 24-hour "monitoring and guarding".

"They're not allowed to come and go," Mr Logan said.

"They've all been through full security and health checks before being transferred from Christmas Island."

It is believed 28 unaccompanied children were recently transferred from Christmas Island to the motel because Brisbane's Immigration Transit Centre, which houses 49 detainees in family groups, has been full since March.