NSW has called on local governments to update their asbestos policies in light of the Mr Fluffy crisis in Canberra

WorkCover NSW has written to local councils asking them to update their asbestos records to include information on loose-fill asbestos insulation in light of Canberra's Mr Fluffy crisis.

The move comes as authorities confirmed on Thursday that a second company could have installed loose-fill asbestos insulation in the late 1960s in the south-west of NSW.

Mystery continues to surround the suggestion that Bowsers Asphalt was installing the material in the Sydney area in the 1950s and 1960s, and an unverified suggestion that it might also have been used in Wollongong.

The name Bowsers came from a 1968 health department report on the activities of Canberra's Mr Fluffy, which noted that Bowsers had used asbestos "in a similar manner in Sydney for the past 13 years'' and was considering setting up in Canberra.

But a spokesman for the Heads of Asbestos Co-ordination Authorities in NSW, a cross-agency authority, said from what was known of Bowsers Asphalt, it was spraying asbestos insulation onto metal structures in commercial buildings as a fire retardant.

The use of sprayed asbestos, in which the fibres are contained in a bonding agent, appears to have been commonplace. It was used in Canberra buildings and, according to ACT authorities, is nowhere near the concern of Mr Fluffy loose asbestos fibres.

The NSW authority said it was not aware of any residential buildings that used the services of Bowsers Asphalt.

But it did refer to another company possibly installing loose-fill asbestos insulation. The authority said the one record NSW Health had on the issue suggested there was another contractor besides Mr Fluffy operating in the state's south-west in the late 1960s. But the agency had no evidence such as a trading name for any historic supplier of the material, the spokesman said.

Queanbeyan City Council knows of 11 properties, including a block of flats, that still contain loose-fill asbestos in their ceilings. Authorities are aware of two others in the state.

WorkCover NSW's Peter Dunphy wrote to potentially affected councils on July 31 warning them that the Canberra company now known as Mr Fluffy might have installed the dangerous insulation in their area. He warned them also that the material could migrate to different parts of the home.