A newborn baby has died after being given nitrous oxide as opposed to oxygen at a Sydney hospital. A second newborn has been left brain damaged and is in a critical condition following the "devastating error".

The children were born in June and July. Both babies were being treated at the Bankstown-Lidcombe Hospital's neonatal resuscitation unit when they received nitrous oxide – commonly known as laughing gas – which was wrongly dispensed from an oxygen outlet.

According to reports, the wrong gas had been installed last year. New South Wales health minister Jillian Skinner issued an apology after the fatal error.

"I am profoundly sorry for the families of a newborn baby who died, and another who was severely affected after the wrong gas was dispensed through a neonatal resuscitation outlet at Bankstown-Lidcombe hospital," Skinner said on Monday (25 July).

"The families were advised the oxygen outlet in one of the hospital's theatres was incorrectly installed and certified by BOC Limited in July 2015," she added. "The error was discovered last Thursday (July 21) after a paediatrician raised concerns about the unexpected death of the second baby, which has been referred to the Coroner."

Skinner added that NSW Health will do "all it can to support" the families of the children. No other baby received gas from the gas outlet in question, she added.

BOC said it had launched its own internal investigation and said it deeply regrets the "pain and sorrow" the affected families are going through in a statement. It added: "As soon as BOC was notified of the situation we cooperated fully with all investigations being undertaken by the NSW Government – the hospital, the NSW coroner, and the Ministry of Health teams."

Opposition health spokesman Walt Secord called the situation "every parent's worst nightmare" and called for an independent review. "It is astounding and shocking," Secord said according to ABC News. "There has to an independent, external investigation, separate from that conducted by the Department of Health."