The misdiagnosis of Panama Tropical Race 4 at a far north Queensland banana farm is the first time a "state-of-the-art" test for the disease has been proved to be unreliable.
One of two banana farms in the region diagnosed with the devastating fungal disease was given the all clear by biosecurity officials on Tuesday.
The property, located near Mareeba, had returned a positive test result last month.
But this test has been proved to be a false positive, acting chief biosecurity officer Malcolm Letts said in Brisbane.
"It's a testament to our procedures that we've actually identified that it does create false positives," he said.
"It's the first time that that's happened."
He said the internationally recognised test was developed in 2010 and was considered a "state-of-the-art" measure for screening for the fungal condition.
"That test has proven to be unreliable," he said.
"We now believe ... the test can no longer be used in our testing regime."
The five-week quarantine on the property will now be lifted, he added.
An independent review will also be completed to analyse the effectiveness of all Biosecurity Queensland's diagnostic processes.
The ruinous fungus, which stops banana plants from producing marketable bunches, can never be eradicated once it has contaminated a farm's soil.
It is credited with wiping out the Northern Territory's industry in the 1990s.
While the Mareeba property farmers are thrilled to have been cleared, Mr Letts said officials were "100 per cent" sure the other quarantined plantation at Tully was carrying the disease.
"To date, 12 diagnostic tests conducted on a range of samples from the Tully property have all been positive," he said.
The Queensland government has committed to reimburse the net revenue forgone for the quarantined period for the owners of the two farms.
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