NSW health authorities reported on Sunday that potentially combustible cladding was installed at the Queanbeyan Hospital when it was built.
An independent consultant who inspected the hospital for any non-compliant cladding panels delivered the verbal advice to health authorities on Friday.
The consultant said the cladding may be Alucobond PE, a potentially combustible form of aluminium cladding.
Combustible panels have been blamed for fires that enveloped the Grenfell Tower in London, killing more than 80 people, that raced up the Lacrosse building in Melbourne and that have twice struck The Torch in Dubai.
The statement from NSW Health said it began an audit of all hospitals and health facilities weeks ago and the review was continuing.
Health authorities have sought urgent further assessment of the 47-bed Queanbeyan Hospital.
"Pending written confirmation of the verbal report regarding Queanbeyan, anticipated to take two weeks, the Ministry of Health in conjunction with the Minister for Health, has sought urgent further assessment," a NSW Health statement said.
NSW Health infrastructure chief Sam Sangster said the hospital was being further assessed this weekend.
"It had a Building Code of Australia certificate issued in 2008 and at that time the building was compliant with applicable standards. However the Ministry of Health is now reviewing compliance against contemporary fire safety knowledge," Mr Sangster said.
"The NSW Ministry of Health and the Southern NSW Local Health District treat patient and staff safety as a priority and wish to reassure the community that these issues are being addressed as a matter of priority."
The NSW Health statement said the southern NSW local health district had also implemented extra safeguards at the hospital, including informing fire authorities of the potential risk and employing extra security staff.
Authorities are also looking at professional advice on removal of the cladding as an interim measure.
A Senate committee recommended last week the potentially lethal aluminium composite panels, which have been widely used on apartment buildings across Australia, should be subject to an immediate total ban on their importation, sale and use.
The inquiry was established in the wake of the 2014 Lacrosse apartment fire in Melbourne's Docklands, and has been looking into poor building practices and unsuitable products across Australia since then. It made an initial interim report last year.
The second Senate interim report delivered on Wednesday was produced quickly, with the Grenfell tower fire giving it urgency now the danger was so clear.
The ACT government confirmed in June that flammable claddingsimilar to that at the centre of the Grenfell tower blaze is widely used in Canberra buildings.
Up to 10 per cent of the Centenary Hospital's cladding panels have been identified as a credible fire risk, and are to be removed from the building.
The women's and children's hospital was the first found to have the deadly cladding, after the Grenfell fire sparked an ACT government audit of territory-owned buildings.
The ACT health directorate was among the first government department to finish the audit and only one of its buildings had the panels.