The New South Wales Government is following the ACT's lead by committing to knock down all buildings insulated with potentially deadly loose-fill asbestos roughly 40 years ago.

The substance was pumped into more than 1,000 houses across Canberra, and an unknown number of properties in NSW, by an operator that has become known as Mr Fluffy.

While a clean-up operation costing about $1 billion is already underway in the ACT, fixing the same problem in NSW is likely to cost hundreds of millions of dollars and could affect more than 1,000 families in suburbs like Parramatta, Manly, Lithgow, Yass, Bungendore and Queanbeyan.

"The only enduring solution is for these homes to be demolished," NSW Finance Minister Dominic Perrottet said.

"There is no dollar figure you can place on the health and safety of citizens in New South Wales."

Between 300 and 1,000 New South Wales homes are expected to be contaminated with the asbestos insulation, but only 57 have been identified.

Most of the affected properties found so far are in Queanbeyan, just on the edge of the ACT.

However, authorities are still searching for Mr Fluffy homes in 26 different council areas, predominantly in parts of Sydney and towns surrounding Canberra.

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Queanbeyan Mayor Tim Overall welcomed the announcement, and said it would give "a high level of certainty to affected home owners and residents".

"Until now, many affected home owners and residents have been living on the edge of financial uncertainty and long-term health risk," he said.

The State Government will provide a package for affected families that will include rental assistance, counselling, environmental cleaning and house inspections.

The Loose Fill Asbestos Insulation Taskforce has also been established to look at the best way of demolishing or buying back the homes.

The taskforce will report their findings in May.

"Let's not pre-empt what that cost will be," Mr Perrottet said.

"We are trying to work out, and will work out, over the course of this process the extent of the problem.

"I think this is an issue that both NSW and the ACT have struggled to come to grips with for some time."

Mr Fluffy's New South Wales legacy long overlooked

The extent of the problem in New South Wales has long been a mystery.

Residents across the border were not included in the unsuccessful mass clean-up of the substance in Canberra 20 years ago.

Some community leaders have been calling for help to find the contaminated houses for decades, but say they have been repeatedly ignored by successive state governments.

But the Government said it has learned from the recent experiences in the ACT.

Mr Fluffy homes found in NSW will soon have identification tags to prevent tradespeople from coming into contact with the asbestos.

Also, homes with the substance will not be able to be sold without full disclosure from the owners.

But Mr Perrottet conceded that finding all the contaminated properties could take several years.

"There's no doubt that could be the case," he said.

"But what I'm really focused on at the moment is getting the facts on the table and that's what this taskforce in my view will achieve."

The government has set up a website and hotline in a bid to encourage more people with contaminated homes to come forward.