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The hut has 24 bunks for visitors to the Caples Valley, southwest of Glenorchy, and replaces the smaller 12-bunk hut built in 1975.
The new hut has a large communal area, is fully insulated and has summer flush toilets. It also has a sunny front deck with scenic views.
Fees for overnight use of the hut will remain at $15 per adult, $7.50 for children aged 11-17 and free for children 10 years and under.
Doc Wakatipu conservation services manager John Roberts said the Mid-Caples, with its mix of grassy river flats and mature beech forest, was one of the Wakatipu's most pleasant valleys.
More than 3000 people visited the area every year and the demand for outdoor recreation was increasing.
''Many visitors walk through the Mid-Caples to reach the Upper Caples and then over to the Greenstone Valley,'' Mr Roberts said.
''The Mid-Caples also provides great opportunities for less experienced people to go outdoors. The area is popular for families, fishermen, hunters and school groups, many of who will complete a short return trip from the road-end.''
Construction of the new Mid-Caples hut follows upgrades of the McKellar and Greenstone huts in the Greenstone Valley, he said.
''We have also redeveloped the track from the Upper Caples that goes over the McKellar Saddle to McKellar Hut in the Greenstone Valley. The walking time between the Mid-Caples and McKellar Huts is now six to seven hours.
''With the improved travel over McKellar Saddle it is no longer necessary for trampers to stay two nights in the Caples Valley when walking the Caples/Greenstone circuit. People tramping the Caples/Greenstone will now overnight at the Mid-Caples, McKellar and Greenstone huts, making the trip a four-day journey.
''We have therefore decided to close the ageing Doc hut in the Upper Caples to public use.''
The department is considering the future of the Upper Caples hut, which may include it being managed by a community group.