Sydney's St Vincent's Hospital has revealed its pathology service incorrectly messaged 400 people to tell them they had tested negative to Covid-19 - when they had in fact tested positive.
The laboratory's medical director professor Anthony Dodds blamed the mistake on the "large volume of tests" they were processing.
Those affected were notified of their result, for swabs taken from December 22 and December 23, last night at 8pm.
Professor Dodds said they had become aware of the mistake this morning.
"These people had tested positive to Covid," he said.
"As soon we became aware of the issue this morning, SydPath immediately commenced a process to contact impacted people.
"We sincerely apologise to all those impacted."
SydPath is currently providing its pathology service to a number of Covid testing clinics across the state, including the popular Bondi drive-through site.
Professor Dodds said the mistake was possibly a result of "human error" and was currently being investigated by their emergency response team.
He said no-one in the Sydney to Hobart yacht race was "believed to be caught up in these impacted people."
The error comes as testing services around NSW struggle with high demand, with many people having reported being turned away at testing clinics due to full capacity.
The seven-day average for Covid-19 tests has been around 145,000 swabs a day.