Former Navy ship ex-HMAS Tobruk has been scuttled off the Queensland coast, where it will become a dive site and tourist attraction.

After the event was rescheduled twice due to unfavourable weather conditions, the ship was towed overnight to a spot halfway between Bundaberg and Hervey Bay, about 15 nautical miles off the coast.

Queensland Minister for the Environment and Great Barrier Reef Leeanne Enoch used a flare to signal for the scuttling to begin, before the valves were opened and the ship was flooded and sunk.

It was the culmination of a five-year local campaign to use a military vessel to create an artificial reef in the area.

Project manager Steve Hoseck said it had taken months of work to reach this point, but the ship would be a unique drawcard for divers from across the world.

"It's a very proud moment, but bittersweet too," he said.

"This dive is going to be like no other wreck in Australia.

"It is a massive void inside there, there's huge areas for people to swim around in.

"You'll be able to swim 110m in one direction inside the ship, and the wildlife that's going to habitat this artificial reef is just going to be outstanding."

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Ex-HMAS Tobruk was decommissioned in 2015 after 35 years service, mainly as an Army transport vessel.

Hervey Bay fisherman Nick Schulz came up with the idea for the wreck, and said it was needed to boost fishing and tourism.

"It'll keep improving our fish stocks for the next 50 to 100 years, just that alone is worthwhile doing, let along all the tourism," he said.

He was among hundreds of spectators who sailed out to the site for the event.

The ship will now begin its new life as a reef, with hundreds of people already on the wait list to dive the site as early as August.

Minister for Environment and the Great Barrier Reef Leanne Enoch signals the start of the scuttling of the ex-HMAS Tobruk. ( ABC Wide Bay: Johanna Marie )

From wreck to reef in two years

While fish and other sea life are expected to migrate to the site quickly, the forming of the reef could take more time.

But a boat that caught fire and sank near Lady Musgrave Island, to the north of ex-HMAS Tobruk's final resting place, gives some insight into how quickly a wreck can be transformed into a reef.

Little more than two years ago the Spirit of 1770 catamaran tourist vessel sank 40 metres beneath the sea, but it has quickly become a haven for marine life.

Gladstone diver Russell Swann, who has 20 years' experience, has photographed the boat's remains.

Under the hull of the The Spirit of 1770 at the bottom of the sea off the Queensland coast. ( Supplied: Russell Swann )

He said he was surprised by just how quickly the marine life took over.

"The amount of growth, life and colour is just incredible," he said.

"I've dived a lot of wrecks around central Queensland and that's by far the most colourful.

"It's not at all what I expected to see down there."

He said coral growing across the wreck has attracted a wide range of fish to the 23-metre sunken catamaran.

"There is schools of trevally, red emperor, plenty of reef fish and some of the marble rays you see are 2 metres across," Mr Swann said.

"Under the hull, because it's a catamaran, it's like swimming down a dark tunnel because of all the fish life."

The Spirit of 1770 at the bottom of the sea off the Queensland coast. ( Supplied: Russell Swann )

Federal Member for Hinkler Keith Pitt, who lobbied for ex-HMAS Tobruk to be sunk in his electorate, said it was a fitting way for the former Navy vessel to continue its service.

"[For] our service personnel, our sailors, for them it was home … it's a very very big deal," he said.

"We said from the outset that we would treat the ship with the dignity that it deserves and I think we've done that.

"It's been great that we've had the opportunity for so many people to reboard her and give one last visit, but it does have a new role to play for the Australian people, and that will be as a tourism facility for diving."