The case was revealed in the latest annual report from the NSW Health Care Complaints Commission.
The report did not name the hospital in which it occurred, but the ABC understands the woman received treatment in the private sector in 2014-15.
The report said the woman was told she had stage four liver cancer by a surgeon who looked at her CT results, but did not order any other tests.
The surgeon referred the patient to an oncologist who recommended six months of chemotherapy without doing further tests.
"This is a devastating case," Labor's health spokesman Walt Secord said.
"Chemotherapy patients have nausea, they lose their hair, their toenails, they lose their appetite.
"Your heart just goes out to someone who has to endure six months of this unnecessarily due to a medical bungle."
The report said the oncologist stopped chemotherapy because the woman's body was not responding to the treatment — the tumours in her liver were not getting smaller.
This prompted the oncologist to order a review of the original CT, which showed the woman's tumours were benign, not stage 4 liver cancer.
The woman was then given the correct treatment for benign tumours, as well as treatment for the chemotherapy toxicity.
"[She] has made a full recovery," the report stated.
It said both the surgeon and the oncologist had been referred to the Medical Council of NSW for further action "to address their poor performance".
"This has been the worst year for NSW Health," Mr Secord said.
"We've had the chemotherapy under-dosing hospital, the Bankstown-Lidcombe Hospital baby gassing and the Royal North Shore baby cremation mix-up."
The Commission received 6,075 complaints in the 2015/16 financial year — a 15 per cent rise on the previous year.
Labor said it was continuing a trend, arguing there had been a 47 per cent rise in complaints over the past five years.
The ABC has contacted Health Minister Jillian Skinner for comment.