Prime Minister Viktor Orban, an admirer of US President Donald Trump and who has called immigration "poison", announced plans for the three-metre (10-feet) high fence last August.
It will reinforce an existing barrier erected in 2015 at the height of Europe's migrant crisis along the 175-kilometre-long (110-mile-long) frontier in southern Hungary.
The new fence will have sensors every 10 to 15 centimetres that trigger alarms, Orban's chief security advisor Gyorgy Bakondi told the Magyar Hirlap newspaper on Monday.
A government spokesman confirmed to AFP a report in pro-government daily Magyar Idok that work has begun, with columns erected close to the Kelebia border crossing.
The newspaper said that the work was being done by prisoners, who in November completed a test section 10.3 kilometres (6.4 miles) long.
Bakondi said that this part "exceeded expectations" and led to a complete stoppage in illegal border crossing there.
The new barrier will be completed within two months before the summer months that could coincide with an increase in migrants attempting to cross, according to Magyar Idok.
Orban's right-wing government hopes that when fully built the fence will cut the numbers of troops and police officers required to patrol Hungary's border with Serbia.
In 2015 over 400,000 migrants trekked through Hungary, a border of the EU's passport-free Schengen zone, toward northern Europe.
After the first fence line was completed in September that year, and another one along the Croatian border a month later, the number of migrants entering Hungary slowed to a trickle.
The government says however that dozens of migrants are still caught trying to cross the fence every day.
Eyewitness? Submit your stories now via social or:
Email: news@pulselive.co.ke
