Premier Peter Gutwein says Australia's chief medical officer was "commenting on a rumour" when he alleged that an "illegal dinner party" was behind the worsening coronavirus outbreak stemming from Burnie hospitals.
Professor Murphy made the comments during a live televised video conference with New Zealand officials, although he appeared to offer no further details of the alleged "party".
"We thought we were doing really well in the last week and then we had a cluster of 49 cases in a hospital in Tasmania just over the weekend," he said.
"Most of them went to an illegal dinner party of medical workers, we think."
His comment was followed by a laugh.
COVID-19: The latest updates for Tasmania
Professor Murphy was speaking with New Zealand's Epidemic Response Committee at the time.
Premier Peter Gutwein spoke to Professor Murphy on Tuesday morning, and address addressed the matter in his morning briefing.
Mr Gutwein said contact tracing had not stemmed to the alleged party, but Tasmania Police has been directed to investigate the matter.
"I spoke to Brendan Murphy a short while ago," he said.
"To be frank Brendan Murphy was commenting on a rumour.
"At this stage, our contact tracing has not identified a dinner party of health workers.
"However I accept that this is a serious allegation and it's something that needs to be followed up.
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"We will retrace our steps, but importantly I have asked Tasmania Police to investigate this matter and that will start today.
"At the end of the day, I am certain that there are many hard working health professional on the North-West Coast who feel that their reputation is being maligned.
"Regardless of whether or not that party took place, it does not change the fact that we need to get on top of this outbreak."
Mr Gutwein confirmed that Professor Murphy did not have public health advice regarding a "dinner party", but he still supports him in his role as chief medical officer.
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In a statement, Professor Murphy said he had been advised that the dinner party did not occur.
"This morning in discussions with a New Zealand Parliamentary Committee, I referred to suggestion that a dinner party may have been the source of some of the transmission in the North West Tasmania cluster of cases," he said.
"Whilst this possibility had previously been mentioned to me following initial investigations, I am now informed that the contact tracing has not confirmed that such a dinner party occurred.
"Tasmanian officials are continuing their investigations."
Tasmania's coronavirus tally sits at 150, with 57 recovered, 88 still being managed and five deaths.