Up to 10 per cent of the cladding panels installed on the Centenary Hospital for Women and Children were found to be a "credible fire risk", as they were installed over emergency exits and evacuation areas.
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Health Minister Meegan Fitzharris said the building itself was "modern and safe" and patients and staff should not be worried, but between five and 10 per cent of the panels would be removed as a precautionary measure.
An independent assessment of the building found the panels were a credible fire risk in recent weeks, as they had been installed over emergency exits and pathways.
The panels are similar to those on London's Grenfell Tower, where 80 people died in a fire earlier this year, where panels near emergency exits may have contributed to the deaths.
But the hospital is significantly safer than that building as it has up to date internal containment measures and an extensive sprinkler system, which the Grenfell Tower did not have, among fire safety measures.
While the hospital met safety codes when it was completed in 2012, the government was aware of combustibility issues with such panels as early as 2009.
The Opposition asked numerous questions in the assembly about the issue on Thursday, but it remains unclear why the panels were installed, given concerns existed prior to construction.
Despite Opposition health spokeswoman Vicki Dunne earlier asking if the University of Canberra Public Hospital may not have been audited, Ms Fitzharris confirmed the new hospital had been assessed and was cleared of any risks.
After the Grenfell Tower fire that the government established a taskforce to deal with the problem, and an ACT Health audit has confirmed the hospital was the only health-operated building at risk.
ACT Fire and Rescue's Commander Brian Talbot said there were no problems with fire safety internally in the building, but the risk was essentially that the panels could catch alight if a nearby fire spread to the hospital's exterior.
Ms Fitzharris said the hospital was the only health building that has such panels installed, that ACT Health was also the first agency to complete the audit, and that the directorate made the decision to remove the panels.
She told the assembly it would take some time to remove and replace the panels, but the work was a priority and the government would remove them to "go the extra mile" in the wake of the Grenfell Tower tragedy.
Environment and planning directorate director-general Ben Ponton, who is leading the ACT-wide taskforce, said it was the only building so far identified in a desktop audit of all ACT-owned buildings.
He said he expected only "modest" numbers of other territory-owned buildings to be identified, and inspectors would then check out every site identified in the taskforce 's risk matrix before detailed assessments were completed.
Mr Ponton said buildings expected to face detailed assessment would have to have the specific type of panels installed, be at least three stories tall and be occupied.
While many buildings nationally use similar panels, they mostly do not pose any safety risk, as the risk relates to where they are installed, building heights and a number of other factors.
Mr Ponton said the taskforce was also working with the Master Builders Association and Housing Industry Association, among others, in an effort to ensure private developers identified and rectified any such privately-owned buildings in the ACT.
The taskforce, he said, was also awaiting a report from the federal government on an audit of the 100-odd Commonwealth-owned buildings in Canberra.
Planning Minister Mick Gentleman said that the government-wide audit would be completed as soon as possible and Access Canberra could use 'coercive powers' to ensure privately-owned buildings were also addressed.
