The survey will include Queanbeyan, Yass, Braidwood, Goulburn and other areas surrounding Canberra, with authorities aware of 11 properties in Queanbeyan, one in Yass, and one in the Palerang area that contain "Mr Fluffy" asbestos.

NSW has lagged behind the ACT in its reponse to the crisis, insisting that homes in the states containing loose-fill asbestos insulation are safe to live in as long as the fibres are undisturbed.

But as Canberra prepares for the likely demolition of up to 1000 homes that contained Mr Fluffy asbestos insulation in the 1970s and 1980s, NSW Finance Minister Dominic Perrottet announced on Friday that the state would conduct detailed health assessments of the 13 known houses in NSW and make a concerted effort to track down others.

For the 13 homes already identified, authorities will conduct detailed testing, including air monitoring and possibly asking householders to wear monitors to test the air they are breathing as they go about day-to-day tasks in their homes.

Owners of homes built before 1980 in the 14 local government areas will be able to request a free assessment over the next 12 months, to have their ceilings checked for asbestos insulation.

The chairman of the Heads of Asbestos Coordination Authorities, Peter Dunphy, said the testing offer might well be taken up by thousands of households, but he didn't expect to find widespread use of the insulation.

"So far we don't think this going to be very widespread," he said. "We're not really anticipating a much bigger number than we've already encountered, but we'll wait to see what comes out of the investigation and what comes out of the samples that come forward."

He conceded that some homeowners with the insulation might not come forward, but said authorities could not force themselves into people's homes. They hoped that by offering free assessments they would encourage anyone who suspected the presence of the material to make contact.

Mr Dunphy said the Canberra experience showed removing it had not been effective (the asbestos was removed from the Canberra homes 20 years ago, but fibres have now been found in walls and elsewhere), so containment or demolition were the options facing NSW.

The survey area is highly selective. It doesn't include all south-eastern areas, but covers the Greater Hume, Berrigan and Wagga Wagga council areas near the Victorian border, the Bega Valley, Snowy River, Cooma Monaro and Eurobodalla council areas on the south coast and the Snowy Mountains, the Palerang (including Braidwood and Bungendore), Queanbeyan, Yass Valley and Goulburn councils around Canberra, the Young council area further west, and Ku-ring-gai and North Sydney councils.

Asked how the areas were chosen, NSW authorities said the decision was made on anecdotal information received from the ACT Government, local councils and state governments records and as a precautionary measure.

An investigator will be appointed to trawl through state and local government records and follow up anecdotal information to track down any evidence of Mr Fluffy or other loose-fill asbestos companies installing the material in other homes in the 14 areas.

It is clear Mr Fluffy operated outside Canberra, and NSW Health believes a company other than Mr Fluffy may have been operating in the south-west of the state - although this could also have been an offshoot of the Canberra-based company run by Dirk Jansen, colloquially known as Mr Fluffy.

A federal government report from 1968 refers to Sydney company Bowsers Asphalt installing the product over 13 years, but authorities believe Bowsers was using a sprayed form of asbestos as a fire retardant in commercial buildings.

Anecdotal reports suggest the material might have been used in Wollongong in the 1970s, but Wollongong is not part of the survey area.

Mr Perrottet would not reveal the cost of the survey, testing and investigation, but confirmed it was being paid by the NSW government.

Mr Dunphy said similar testing of affected homes had been done in 1993, including monitoring the air householders were breathing over eight hours, and it had not found asbestos levels higher than control houses.

Queanbeyan Mayor Tim Overall welcomed the announcement as a step in the right direction. He has suggested as many as 60 homes in Queanbeyan could contain the asbestos, based on the proportion of Canberra homes affected, and said he hoped the new investigation would identify all affected properties.

Yass council director of planning and environment Chris Berry said the news was welcome, allowing residents to have their homes checked.

"At least then people know, rather than at the present time when they're completely in the dark about whether they have a problem or they don't have a problem," he said. "The challenge is if there is a problem how do you manage that problem with that particular family."

Yass council has written to the single house it knows of this week, alerting the owner to the presence of the insulation.