As of my experiences in November 2011, coming from the UK on a 457 visa you do NOT need private medical insurance.
When my 457 visa sponsorship was transferred due to moving companies here (in Nov '11), I was assigned a Migration Solicitor (?????????) from a VERY well known migration agency in Melbourne. She wrote to me saying the only thing left to approve the sponsorship was proof of private health insurance. "Cod sh*t" I said, and sent her a link to the 457 visa FAQ's which states you don't need private medical cover if you can qualify for reciprocal healthcare (Medicare) - which UK citizens certainly do. "Oh, yeah...... OK then" she said. Solicitor. Migration. Expert. Qualified professional.
We arrived in August 2011 and used one way travel insurance, then as soon as we got here applied for free reciprocal medicare cover and took out ambulance insurance. All sorted.
Motto: No matter how qualified someone claims to be - always take the time to check the facts yourself.
You would not believe how many times a 'professional' down here has told us something only for us to quickly check the facts and prove them wrong. I couldn't care less if it annoys them - they're paid to know their job and in nearly 2 years of being here we've yet to deal with one that does.