Contaminated mulch containing asbestos fragments which prompted testing at two nearby schools after being found at a parish was donated by a developer.
Six more sites across NSW have been confirmed contaminated with asbestos as two more schools await results and hospitals are tested.
One sample confirmed the more dangerous friable asbestos as well as bonded asbestos in mulch at Bicentennial Park on the Glebe foreshore in inner Sydney, after the material was previously found at another park at Surry Hills.
The fragments found were considered low-risk to the public, NSW Health executive director of health protection Jeremy McAnulty said.
"The majority of specimens identified have been bonded asbestos ... the one sample that has been reported today as friable ... the fibre has been attached and part of a material at the back of a tile, which indicates it is not available to be aerosolised or breathed in," Dr McAnulty said.
St Benedict's Catholic College and St Justin's Catholic Parish Primary School at Oran Park in the city's west are undergoing precautionary tests after bonded asbestos was confirmed in mulch at the nearby St Mary Mackillop Catholic Parish.
"Mulch has only been identified on parish property, but precautionary testing will be done at both schools," the EPA said.
The mulch was donated by a developer, the agency's chief executive Tony Chappel said on Tuesday.
The vast majority of mulch the EPA was concerned about has now been tracked down and tested, he added.
"There are a number of other cash-sale type scenarios that we are just working through now, but it's a handful of private residences that have been impacted," he said.
Education Minister Prue Car flagged serious penalties for suppliers found to have used recycled mulch in schools, which is not permitted under their contracts.
The minister said she could not guarantee there would not be more sites affected by contaminated recycled mulch.
"To put this in perspective, we have almost 3000 schools across the state ... and we're talking about 12 (affected) schools that we are managing," she told a budget estimates hearing on Tuesday.
"Something has gone seriously awry here and not just in schools, but across the community."
Precautionary tests are also being conducted at Westmead, Sydney Children's, Hornsby Ku-ring-gai and Nepean Hospitals.
A private aged care facility at St Ives and an industrial area at Rouse Hill were also secured after positive results.
In Sydney's south, a park at Rosebery has been confirmed contaminated.
Another detection was confirmed on a private property, bringing the total to 47 sites since bonded asbestos was detected in mulch at the recently opened Rozelle Parklands in January.
Sydney's asbestos-mulch issue has also spread to Canberra with the potentially contaminated product sold for nine months in the capital.
An ACT landscaping business will continue contacting customers this week after the product sold as "cottage mulch" was confirmed to have originated at Sydney's Greenlife Resource Recovery.
The ACT Environment Protection Authority said it had acted to prevent further sale, and no positive results have been reported.
The NSW EPA's criminal investigation of the complicated supply chain is ongoing.
Mr Chappel has cautioned against prematurely attributing blame.
Greenlife is challenging a prevention order in court and said its mulch is independently tested by approved laboratories and the company was confident it left its facility free of contamination.
