Ms Gallagher told an Assembly hearing that people’s lives had been "turned upside down" after discovering that the dangerous insulation might remain in their homes, and that a fresh "stand-alone" response was needed from the government.

The government is expected to make a statement next week on the issue. A spokesman for Attorney-General Simon Corbell confirmed the impending announcement but would not give further details.

Ms Gallagher said "urgent responses" were needed for some families who had to leave their homes, and she was concerned about the "disruption and dislocation that’s caused".

In April the head of the Asbestos Safety and Eradication Agency, Peter Tighe, called for the 1050 homes suspected of containing loose amosite asbestos installed by Mr Fluffy between 1968 and 1978 to be demolished.

Mr Corbell's office confirmed he had written to senator Eric Abetz, spurred on by Mr Tighe's announcement.

"Recently, there have been officer-level discussions between the ACT Office of Industrial Relations and the Commonwealth Department of Employment and Safework Australia about developing a joint approach," Mr Corbell's spokesperson said. Mr Corbell has so far dismissed calls for a mass demolition of the Mr Fluffy houses, saying it would be prohibitively expensive.

The comments are a departure from the government’s response earlier this year. In February the ACT government wrote to Mr Fluffy home owners but did not include information on health dangers of inhaling fibres or any offers of support for those forced from their homes.

On Tuesday Ms Gallagher said the issue had become a priority for the government and was a growing issue for the territory. "There’s no doubt for me that asbestos has been a long-term thing for this city and the fact that we know more today than we knew a year ago," Ms Gallagher said.

Since the hazardous material was installed into Canberra homes before ACT self-government, Ms Gallagher said she was hoping the federal government would now recognise it as a shared responsibility.

"What we’re learning from the Mr Fluffy homes increasingly confirms the need to have the Commonwealth there and at the table with us," Ms Gallagher said.

She said the government was looking at the legacy left by both loose-fill asbestos and contaminated land. "There’s no doubt in 1989 people [did not understand] exactly what that legacy entailed or indeed how much of that stuff is buried in the ground," Ms Gallagher said.

The February letter advised residents to leave internal wall or sub-floor spaces alone and get their houses assessed for any migration of fibres into living areas. Mr Corbell has so far refused to reveal a list of affected homes.

It is believed residents' advocacy group Fluffy Owners and Residents Action may be considering a class-action to address financial losses caused by the installations.