The Daily Post reported the decision was made by the Minister of Justice and Community Services, John Still Tari Qetu.
Container City is so-called because the living quarters were built from bulk cargo containers.
National Human Rights Coordinator Albert Nalpini visited the facility last month.
"From that visit, we observed that the facility is not fit to keep detainees inside and does not fit the standards set by the United Nations," he told the newspaper.
"The property was built in 2009 on a temporary basis…it was supposed to be used only for three years."
