The parliamentary probe will examine the environmental, economic and health impact of per- and polyfluoroalkyl substances, collectively known as PFAS chemicals.
It comes after Sydney Water found the chemicals in drinking-water supplies in quantities that fall within Australian guidelines but well outside tighter US standards.
Ms Plibersek, the water and environment minister, said the inquiry would also examine why the US tightened their standards in 2024.
"We have to be cautious with PFAS and related chemicals and that's why I have banned the importation of a whole lot of chemicals in this class from 1 July next year," she told Seven's Sunrise program on Monday.
"I'm actually very pleased to drink tap water,' Environment Minister Tanya Plibersek said. (Mick Tsikas/AAP PHOTOS)
"It's why we're doing the drinking water guideline review that the health minister has brought forward."
While evidence is growing about the harm the chemicals cause, Ms Plibersek was not panicking about what flowed from the tap in her Sydney home.
"I'm actually very pleased to drink tap water,' she said.
"I know that Australian drinking water or Sydney drinking water is some of the best in the world, particularly because it's got fluoride in it for protecting teeth.Â
"We see a lot of kids growing up in areas where they are filtering their water or drinking bottled water end up with terrible cavities."
Nationals MP Barnaby Joyce supported the inquiry while warning against an alarmist view towards chemicals in drinking water.
"You can't get rid of everything," he said.
"We've got to make sure it's healthy ... but you can't remove every iota of risk."
PFAS compounds encompass more than 14,000 chemicals that do not break down and can accumulate toxins in plants and animals.
Exposure to some of the chemicals has been associated with a higher risk of certain cancers.
They are commonly found in a range of household goods such as non-stick pans, food packaging, dental floss, cosmetics, sportswear and firefighting foams.
Melbourne Water and Western Australia's Water Corporation say testing of their water sources found no samples of the chemicals above Australian standards.
