A group of south-western Sydney residents have launched a class action against their local council, alleging it is responsible for asbestos being dumped near their homes.

Chipping Norton local Bernie King is spearheading the lawsuit against Liverpool City Council which was lodged in the NSW Supreme Court earlier this month.

Asbestos was discovered just metres away from his property on Rickard Road last July, one of at least 22 sites potentially contaminated by landfill.

The Environment Protection Authority (EPA) is investigating claims Liverpool council illegally dumped the waste, which could have come from the council's own storage facility.

Mr King said: "I rung a couple of people in the council and I got no answers there and so I rung someone else I knew in the council ... he came back and he told me it was small amounts of asbestos found in the soil that they put here."

"Two weeks after they moved the soil, they sent us a letter about it."

That letter, from July 2015, stated the council was remediating a number of sites nominated by the EPA within the area.

"One of these sites is Rickard Road, Chipping Norton," the letter said.

"These sites were either backfilled or mounded some time ago to minimise vehicle access to the area.

Bernie King, lawyer David Marocchi with another resident outside Mr King's home. ( ABC News )

"The soil used was from a source that is now known to contain small fragments of asbestos contaminating material."

Mr King bought his property in 1982, believing it was a solid investment.

It had been valued at $800,000, however he said that figure had now been slashed in half.

"Not worth a penny, no-one would want to buy it anyway with all the asbestos scares here," he said.

"It's fully stressful, I don't know which way to turn."

Almost 20 residents have now signed up to the class action.

In documents lodged in the Supreme Court, obtained by the ABC, Mr King - on behalf of the group members - alleged the council:

"Was the body responsible for, and in control of all contaminated soil dumped in June 2014 on the nature strips located at Rickard and Newbridge Roads, Chipping Norton. "Employed and or controlled the work activities of the person driving the vehicles and/or working in the vehicles that had carried the contaminated soil; and "Directed the persons controlling and/or working from the said vehicles to dump the contaminated soil on the nature strips located at Rickard and Newbridge Roads."

Claim could be 'in the millions'

David Marocchi from Paramount Lawyers, the firm representing the residents, would not reveal how much money they were seeking, however said it could be "in the millions of dollars".

One of at least 22 sites potentially contaminated by landfill and asbestos in Chipping Norton. ( ABC News )

"We'd like the residents to be compensated financially, but also there's other matters to be considered, there's the livelihood of children and their parents," he said.

Liverpool council would not comment on the legal proceedings, except to say it would be "manning a vigorous defence".

The council had already spent almost $5 million trying to clean up the contaminated landfill, and had set aside a further $2.5 million.

It had previously said it was working closely with the EPA to address the sites under investigation.