The test, which costs less than £100 to make and shows results within 20-30 minutes, can detect whether people are actively infected with the virus.
Academics at University of South Wales (USW) said the test could increase large-scale community testing with a much shorter turnaround time than the current method.
It is being studied in collaboration with Cwm Taf Morgannwg University Health Board and has shown a strong correlation with the accredited Public Health Wales test.
The USW said its approach uses a novel swabbing and sample extraction technique which reduces cross-contamination and biosafety issues.
The test has been adapted from a technique that the researchers have been developing since 2016 for the diagnosis of urinary tract infections.
It was designed to be a simple, quick and cost effective test, which is suitable for the diagnosis of a range of infections, so our work over the last few years has enabled us to quickly switch it to detect the underlying virus for Covid-19.
Dr Emma Hayhurst, also co-leading the research, said: “The really exciting thing is the potential for this technology to be used even wider than with health care workers.
"Our test could be used to help ramp up large scale community testing, running potentially hundreds of samples a day in our lab alone, with a much shorter turnaround time that the current method.
"It could also be developed for point of care which would, for example, offer a solution to people who perhaps live and work in more rural areas.
"Crucially it is an affordable device which is simple to use, which shouldhopefully open up the options available for its use.”
Testing centres have opened in venues around the UK, initially prioritising health and social care workers.
Cardiff City Stadium opened as the first of what the Welsh Government said it hopes will be numerous testing centres across Wales.
These centres are able to test around 200 critical workers a day. There are 438,000 critical workers in Wales according to the Welsh Government.
Mark Drakeford said: "Of course we are sorry for people who have not got tests as fast as they would have liked, of course we wish that the system had been capable of coming on stream faster and for more people."
It comes as the Welsh Government admitted that it will not be able to fulfil its promise of 5,000 tests a day by the end of the third week of April.
Coronavirus: Everything you need to know