Builder John Holland says it has found elevated levels of lead in drinking water before it gets to the site of the new Perth Children's Hospital, sparking fear among residents and deflecting responsibility to the WA government.

The opening of the $1.2 billion hospital has been delayed by more than a year and the construction site plagued by problems such as lead in drinking water, asbestos in roof panels and payment disputes with subcontractors.

The government blamed John Holland and and ordered it to find the source of potentially poisonous lead in the water.

But project manager Lindsay Albonico said on Wednesday its investigations, including three tests earlier this month, found no traces of lead in any of the components it had installed such as brass pipes.

However outside water supplies were contaminated.

“We’ve provided laboratory results to the state’s representative that show there’s lead in water that’s being delivered to the hospital,” he told 6PR radio.

That prompted the Water Corporation to release a statement to “reassure residents” that their water supply met all health related requirements and was completely safe for use.

“Some local residents have recently contacted the Water Corporation concerned that lead may be present in their water supply following comments made in the media,” the statement read.

WA Heath Department Director General David Russell-Weisz held a press conference, questioning John Holland’s tests and saying extensive government testing last year consistently found water supplies were compliant with health regulations.

The tests John Holland says found higher than acceptable lead levels came from water in the `ring main’ pipes that also supply the QEII hospital and not the water main that supplies nearby residents.

Dr Russell-Weisz said people using the hospital should not be worried and that the regulator, WA’s public health executive director Tarun Weeramanthri declared water at the QEII site safe to drink.

“We want to get to the bottom of it but it is the managing contrators’ responsibility to provide a site that has safe levels compliant with Australian Drinking Water Guidelines,” he said.

John Holland’s comments angered senior government figures and bureaucrats.

“The problem, as far as the government is concerned and the results of endless, repetitive public testing is that the lead issue arises within the children’s hospital,” Premier Colin Barnett told reporters.

“The government relies on the independent public health testing. We don’t agree with the claim they’re making.

“I think their (John Holland’s) reputation is suffering a lot of damage. You would not think it is that difficult to deliver high quality water through a hospital.”

WA Labor leader Mark McGowan said the government should release every email, report and briefing note related to the hospital and committed to doing that if he was elected.