The New South Wales Government has announced an independent review and parliamentary inquiry into the death of Lismore woman Miriam Merten, who died after she was left to wander a hospital while naked and covered in faeces.

Ms Merten died in 2014 from a brain injury after she fell over more than 20 times at the Mental Health Unit of Lismore Base Hospital, on the state's north coast.

A coronial inquest heard she was locked in a seclusion room for hours, and when the two nurses supervising her unlocked the door they allowed her to wander around.

She continued to fall over outside the seclusion room.

Corina Merten (left) and her mother Miriam Merten, before her death in Lismore hospital in 2014. ( Supplied: Corina Merten )

CCTV footage of the incident has just come to light.

Health Minister Brad Hazzard said the State's Chief Psychiatrist Dr Murray Wright and a parliamentary committee would review whether failures in mental health care persist.

"What I as Health Minister and Minister Davies as Mental Health Minister want to know, is what every member of the community would want to know — we want to know absolutely that whatever can be done in a very human system has been done," he said.

Coroner Jeff Linden found she died from "traumatic brain injury caused by numerous falls and the self-beating of her head on various surfaces, the latter not done with the intention of taking her life".

Ms Merten's daughter, Corina Leigh Merten, said she only found out exactly how her mother died when a journalist contacted her recently.

She said that at the time of her mother's death, nurses gave her a different version of how she died.

'I actually closed my eyes' watching video: Minister

Mr Hazzard said the department had conducted an internal review to determine what went wrong and make improvements to the health care system.

"There are particular issues though, that Minister Tania Davies and I remain concerned about," he said.

Dr Wright's review is expected to take six months.

Mr Hazzard said Ms Merten's friends, family and others would be able to address the parliamentary review.

"We believe this should be open and transparent, and we need to know on behalf of the people of NSW that the health officials are doing everything they can to improve this system," he said.

Ms Davies said the CCTV footage of Ms Merten's distress was "incredibly disturbing".

"There were times where I was sick to the stomach, and there was a moment where I actually closed my eyes because I felt I couldn't actually take in anymore," she said.

"My heart went out to that poor lady who should have been receiving far better care."

Dr Wright said he was shocked by the footage of Ms Merten's treatment despite 25 years as a practicing psychiatrist.

"Absolute dismay and distress that the system that is set up to try and help people in moments of great vulnerability so clearly failed this person," he said.

He said despite reforms made over the past decade there was "still clearly room for improvement".

"The target ultimately is to eliminate the use of seclusion (the confinement of a patient in a room or area from which free exit is prevented)," he said.

"I see seclusion as the treatment of last resort... and I note that in some parts of the world they have been able to reduce their seclusion rates to zero."