The house, which will stand in the Atlantic Village shopping centre in Bideford until September, has been knitted by hundreds of people from small kits bought from local knitting enthusiast Alison Murray.
The single-storey house is made from 140 square feet of wool, knitted in ten-inch squares and then sewn together. It also contains knitted furniture and is surrounded by a knitted garden.
Two years ago a 30-foot knitted Christmas tree raised more than £10,000 for the North Devon Hospice. A spokeswoman said she hoped the house would raise even more through sales of the knitting kits, auctions of leftover knitted gingerbread men signed by celebrities and a donations box in the shopping centre.