Mining company Linc Energy has been accused of exposing workers to cancer causing gases at an experimental plant in Queensland.
The ABC says it has seen an internal government briefing on an investigation that backs workers' claims they fell ill due to a series of uncontrolled gas releases at the plant between 2007 and 2013.
An investigation by the environment department also found there had been irreversible environmental damage at the site.
The briefing says intensive monitoring has detected unexpectedly high levels of toxic gas and hydrocarbon in soil on adjacent properties in the last few weeks, despite Linc moving to decommission the plant in 2013.
The plant at Chinchilla, on the western Darling Downs northwest of Brisbane, was trialling a controversial process known as underground coal gasification (UCG).
The UCG process allows the extraction of gas from coal seams that are too deep to mine by burning the coal underground, and siphoning off the gas through wells.
The syngas, or synthetic gas, the process produces contains carbon monoxide, benzene, toluene and other substances that are potentially toxic or carcinogenic.
The briefing cited by the ABC shows that a medical expert commissioned by the department reviewed workers' statements and medical records.
It was found the workers' symptoms were consistent with exposure to the chemical constituents of syngas.
Western Downs Mayor Ray Brown has called for calm and a transparent investigation process.
He urged local residents not to panic and deal in facts, but said the government must make sure information flows readily to the community.
Linc Energy has told the ABC it did receive complaints from workers about ill health, but not since 2008 when it introduced a new health and safety program.
It said it didn't know about the medical report commissioned by the environment department.
Linc Energy's Chinchilla plant is located near two private Hopeland properties that recently returned positive soil sampling tests for carbon monoxide, hydrogen and hydrogen sulphide - three of the four main gases produced through UCG process.
The soil tests sparked an additional testing regime focused on air and water quality.
When concerns about the Hopeland sites were raised earlier this month, environment department director general Jon Black said he could not rule out an underground fire as the cause of the gases being present in the soil.
But Linc has denied any link between the soil contamination on the Hopeland sites and its Chinchilla plant.
Linc Energy is already facing criminal charges over allegations of serious environmental harm at Chinchilla.