High-risk cladding found on hundreds of Sydney apartment blocks, investigation finds

More than 400 buildings in Sydney may have high-risk flammable cladding installed, as authorities try and get on top of what could be a death trap.

Lockhart Chambers on Macquarie Street in Sydney's CBD erupted in flames only days after the cladding had been removed.

The owners had been notified that the facade was potentially dangerous. Ironically, it was the scaffolding used to remove the cladding which caught alight.

Fire & Rescue NSW has physically assessed over 2280 sites since London's Grenfell Tower disaster killed 80 people.

The Cladding Task force has directed local councils and the Department of Planning to assess 417 buildings in NSW as a 'high priority'. More than half of those are residential buildings and 83 are high rise.

Minister for Fair Trading Matt Kean insists the fire on Macquarie Street shows their crackdown is working.

"We wrote to the building owners, we identified there were issues and they rectified it," Mr Kean told 9NEWS.

"If the rectification hadn't occurred, this could have been a disaster zone."

The cost of removing the cladding is currently being footed by the owners of the building.

At a recent meeting of responsible ministers across Australia, Mr Kean pushed a discussion paper to explore if anybody else is liable for the cost.

9NEWS understands the NSW Government is also looking at potential compensation package for people who need to either remove the cladding or improve their building’s fire protection.

The Labor Opposition dismissed the crackdown, claiming it was all being done “in the dark”.

"The government is not taking this seriously and they are trying to hide where these buildings are located," Shadow Minister for Fair Trading Yasmin Catley said.