New Zealand's national rail operator has pulled 40 of its newest locomotives from service after discovering they contain asbestos.

KiwiRail says urgent tests are underway on the engines to determine if the asbestos poses any safety threat.

The DL locomotives were made by Chinese manufacturer Dalian Locomotive and Rolling Stock Co Ltd.

KiwiRail says a routine test on Thursday uncovered asbestos in paint on one of the locomotives.

The Chinese manufacturer has since confirmed that it used chrysotile, or white asbestos, in a sound-proofing compound which is either coated with paint or sealed beneath panelling.

ABC TV's 7.30 program last year revealed that 10 freight locomotives made by China Southern Rail were pulled from service in Australia after workers were exposed to potentially deadly chrysotile dust.

Australia bans the importation of any products containing asbestos.

New Zealand prohibits only raw asbestos.

Transport union concerned about KiwiRail oversight

KiwiRail chief executive Peter Reidy says its contract with Dalian Locomotive and Rolling Stock stated that no asbestos was to be used, and that further assurances had been sought and given last year after the Australian revelations.

"We are clearly very disappointed with this situation and working closely with the manufacturers to understand how this could possibly have occurred," he said.

"They have taken full responsibility for this and have undertaken to do whatever is necessary to rectify the situation as quickly as possible."

He says the initial test "confirmed that the asbestos is contained and does not constitute a risk to health".

But the general secretary of New Zealand's Rail and Maritime Transport Union, Wayne Butson, says he understands that the layers of the soundproofing compound are delaminating, potentially exposing workers to asbestos.

"I just think that's outrageous, it just shows KiwiRail's oversight of the manufacturing process is inadequate," he said.

He says no staff have reported health issues, but that people could potentially fall ill in the future.

Exposure to asbestos can lead to lung diseases such as mesothelioma and lung cancer.

KiwiRail hopes to have further test results within the next few days.