No hospitals in Gauteng province have a record of decuplets being born, the provincial government says.
Medical tests show that Ms Sithole had not even been pregnant recently, it said.
The 37-year-old is now being held under the mental health act for observation and will be provided with support.
The statement did not elaborate on the reasons behind the fabrication of the story.
Independent Online (IOL), the media group which owns the Pretoria News that first reported the story, had stood by its reporting.
It went on to allege that Ms Sithole delivered the children on 7 June at Steve Biko Academic Hospital (SBAH) in the capital, Pretoria, saying staff were ill prepared.
It accused the hospital and the provincial health authorities of trying to cover up medical negligence.
“These allegations are false, unsubstantiated and only serve to tarnish the good reputation of Steve Biko Academic Hospital and the Gauteng Provincial Government,” the latest statement said.
Legal action would be taken against the editor-in-chief of Pretoria News, Piet Rampedi, and IOL, it said.
Where did the story come from?
Ms Sithole, who has six-year-old twins, and her partner Teboho Tsotetsi lived in Thembisa, a township with many working-class residents in Gauteng province near Johannesburg.
According to IOL, they attended the same church as Rampedi where he was introduced to them in December. In May it is alleged he interviewed the couple who said they were expecting eight babies – a photoshoot shows Ms Sithole looking heavily pregnant.
