During excavation works to build a children's bike path at Bennett Park St Marys, Penrith Council contractors have uncovered fibrous material on part of the site.
Penrith mayor Mark Davies said work was immediately halted and the area secured.
"Until the material is identified, council has taken a range of precautionary measures including the complete fencing of the site and covering all areas excavated for the track," Cr Davies said.
"Council has called in the experts and a detailed site assessment is being completed.
"The assessment will both identify the material and, if it is asbestos, will guide council in the best management of the site until all works are completed and there is no risk to the community. The site will be remediated to legislated standards so that it is completely safe."
The project when completed will deliver about 250 metres of a two-metre-wide children's bike path, complete with line marking.
Focus on Sydney
In Forum Sydney this Sunday at 6.30pm on Television Sydney (TVS) the panellists will discuss what can be done to fix Sydney's transport problems. As Sydney has grown over the past few decades, infrastructure has not kept pace with population growth. By 2020, traffic congestion will cost Sydney's annual economy $8 billion in lost productivity and our airport will have run out of peak hour capacity. We are facing a crisis. Panellists will discuss what can be done to fix it.