Research conducted in 2008 into anatase titanium dioxide found that the chemical's nanoparticles in sunscreen could react with sunlight to break down the coating of Colorbond roofs, Friends of the Earth said.
The study found that the nanoparticles increased the rate of sun damage to the roofs by 100 times, prompting worries about what it could do to human skin.
New research commissioned by the conservationist group has revealed six out of eight tested sunscreens still contain anatase titanium dioxide.
Friends of the Earth spokeswoman Louise Sales called for an immediate ban of the chemical in sunscreen.
"There are a lot of unknowns and there are no current studies looking at the impact of anatase titanium dioxide on the skin," Ms Sales told AAP.
Ms Sales it was "shocking" that there had been no government action on the use of the chemical in sunscreen, particularly those used by children, in five years.
She also said she felt Australia's sunscreen regulator, the Therapeutic Goods Administration (TGA), had not kept up with the science.
"We believe a precautionary approach is best."
From July all sunscreens in Europe will be required to show labels listing all the nano-ingredients used in them, but there are no plans for such a move in Australia.
"There is currently no evidence to suggest that sunscreen products which incorporate nanotechnologies pose greater safety risks than other products," a spokeswoman for TGA said in a statement.
"The Australian Therapeutic Goods Administration has not identified any evidence that supports the proposed changes to labelling requirements in relation to nanoparticles."
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