Lily Hooper, 18, was found dead by an SES volunteer about 11.30am on Thursday in the dense bushland of the Nattai National Park, in NSW's Southern Highlands.
Initial communications stated she was alive, with later reports suggesting her condition was unclear, and finally that she was dead.
"I unashamedly apologise for any additional trauma that may have caused Lily's family," NSW Police Commissioner Mal Lanyon said on Thursday afternoon.
"The miscommunication obviously was born out of elation that Lily had been found, and her condition at that time was such that searchers were relieved, and certainly those at the command post were elated.
"Tragically, that miscommunication then led to a deflation and obviously we know now an impact on her family."
Lily's parents had expressed their relief to media in the estimated 10 minutes they spent believing she survived.
Police and the SES would investigate its communications response, Mr Lanyon said.
Ms Hooper disappeared on August 12 after leaving her home to go on a hike.
The teenager from Oakdale, in Sydney's southwest, did not return that evening and could not be contacted on her mobile phone, triggering a wide-scale search.
Her car was discovered at the Bonnum Pic trail head the same night she went missing, but earlier on Thursday Assistant Commissioner Joseph Cassar said the teenager was found a long way from her vehicle.
"I can't give you the exact distance but ... it wasn't on a clear walkable track," he said.
"It's thick, dense bush and a lot of it is steep cliff area."
The senior officer apologised to Ms Hooper's family for the miscommunication and the loss of their beloved daughter.
"Every one of the investigators and the searchers, whether they were volunteers or paid personnel, hoped for a more positive outcome," Mr Cassar said.
The miscommunication made its way to Premier Chris Minns who informed a parliamentary hearing Ms Hooper had been found alive.
He later interrupted proceedings to correct the error.
"I've got some terrible news … but it seems as if the early advice was wrong and Lily's body's been found and she's been found deceased," the visibly distressed premier said.
He later issued a statement apologising to the family.
"I genuinely believed I was sharing good news," Mr Minns said.
"I am profoundly sorry to think anything I said may have added to their heartbreak at an already devastating time."
Mr Lanyon did not identify any specific party responsible for Mr Minns' information.
Mr Minns earlier told the hearing Ms Hooper had been found alive with half a bottle of water on her and thanked NSW Police, SES, the Australian Defence Force and hundreds of volunteers who helped with the search effort.
Both Mr Cassar and Mr Lanyon said they did not know where the detail about the water bottle had come from.
Prime Minister Anthony Albanese told parliament Ms Hooper had much more to offer the world.
"Lily Hooper has been taken from her family, her community, and our nation, far too young … losing a young one is an unspeakable tragedy," he said.
Opposition Leader Angus Taylor, who is the local member for the Hooper family, said any parent who learned of the teenager's death would hug their children tighter than usual.
The House of Representatives observed a moment of silence for Ms Hooper before Question Time.
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