With 59 contaminated homes identified to date, investigators estimate there are between 372 and 5376 Fluffy homes across the state. The figure is based on interim modelling by PricewaterhouseCoopers, using the number of homes in Canberra and the capacity of "Mr Fluffy" Dirk Jansen's companies.

The inquiry referred also to reports that people bought bags of the asbestos insulation and installed it themselves - including public servants from Canberra taking it to their south coast holiday homes.

Chaired by Fred Nile and made up of parties across the political spectrum and from both houses of Parliament, the inquiry urged the government to test all homes built before 1980 in affected areas.

It urged the extension of much of the ACT's approach to NSW, including tagging of affected properties, a legal requirement for home owners and real-estate agents to tell buyers and tradespeople, and disclosure of planning certificates. "It is simply unacceptable that governments, whether state, local or federal, have information on the presence of a deadly product in residential properties but are not providing that information to prospective purchasers and residents," it said.

The NSW government response to date had been "agonisingly slow", a lack of urgency that compounded the previous inaction and "further disheartens those affected home owners who are desperately seeking some sign that their plight is being taken seriously".

It rejected the suggestion from the Heads of Asbestos Co-ordinating Authorities in NSW that more work was needed on health risks, saying the risk was already well known and understood, and the demolition of all affected homes was the only viable and enduring solution.

The inquiry said Queanbeyan was the worst affected area, with 52 homes known to date, including an apartment block of 38 units. Two had been remediated and one demolished. Another seven homes had been found elsewhere, one each in the Yass area (in Gundaroo), Bungendore, Orange (demolished last year), in the Lithgow area (remediated), Bankstown (demolished), Parramatta (remediated) and Manly.

But numbers remained unclear. The Asbestos Safety and Eradication Agency suggested it was probably in the hundreds, and Local Government NSW estimated 230 to 316. In its interim report, PricewaterhouseCoopers calculated a low of 372 and a high of 5376. Voluntary testing has so far returned no positive results, with 384 tests done by December 11.

Workcover's Peter Dunphy told the inquiry authorities were trying to work out the extent of Mr Jansen's asbestos activities, including interviewing former workers. Mr Jansen's Asbestosfluf Insulation and J. and H. Insulation and successor firms installed loose-fill asbestos insulation from 1968 to 1979.

The inquiry quoted the head of the Asbestos Safety and Eradication Agency, Peter Tighe, as saying there was no more dangerous asbestos product than the loose-fill insulation.

"Those houses are extremely unsafe," Mr Tighe told the inquiry. "The product risk from asbestos is the most virulent form of all asbestos contained materials. It has an asbestos purity of around 90 to 95 per cent and when disturbed becomes friable in nature, which is a huge risk to the individual and anyone else who might enter the premises."

NSW health authorities argued the risk was very low if the "exposure pathway" limited exposure to very small amounts. But the inquiry rejected the approach.

Maureen Trevanion, who has a Fluffy house on a 50-hectare property near Gundaroo, said demolition was the only answer, but she urged NSW not to follow the ACT's example on compulsory buyback. Ms Trevanion, a retired public servant, runs a horse agistment and does not want to be forced off her land, urging NSW to learn from the anger of Canberra families who wanted to keep their land. The asbestos had been removed from her home in 1992, and testing had found fibres only in a corner of a bedroom cupboard.

Bungendore owner Eddie Casey said the inquiry's report came as a wonderful Christmas gift.

"What a relief, this is fantastic news," he said. "I urge the NSW government to accept these recommendations urgently. It is pretty conclusive what needs to be done."

Mr Tighe also backed the report, saying it would have been difficult for the inquiry to fly in the face of the action taken in Canberra. "The only way to protect the public, householders and those people who might be required to work in these houses is basically to move to a situation of deconstruction," he said.

Queanbeyan mayor Tim Overall supported the report, and said mandatory testing of homes built before 1980 was critical for Queanbeyan "because we just do not know the extent of the problem". The NSW and federal governments had an obligation to accept the recommendations and implement them wholesale and as soon as possible.

Construction, Forestry, Energy and Mining Union Canberra secretary Dean Hall said tradespeople continued to bear the brunt of potential exposure and the recommendation for compulsory training and tagging of homes was "fantastic news and a sensible response".

A spokesman for NSW Finance Minister Dominic Perrottet said the Government was considering the report. It has six months to respond.