Gao Qiang said production had been halted at Sanlu Group after industrial chemical melamine, added by farmers and milk sellers to boost protein content, was found in the powder.

"As of September 12, there are 432 cases of kidney stones in the urinary systems of infants according to reports from health departments nationwide," Gao told journalists.

The number was sharply up from figures reported earlier which put the number of affected babies at about 150, with one dead. Kidney stones are rare in babies and can block their urinary tracts.

More cases were likely to come to light as the ministry had only issued orders for health departments to report kidney stones in babies on Friday morning.

"We will severely punish and discipline those people and workers who have acted illegally," Gao said.

Melamine, a chemical used to make plastics, glues and other products, was at the centre of a US recall of pet foods containing Chinese-made additives last year.

Other controversies, including exports of toxic toothpaste and dumplings, have badly damaged the reputation of China's vital manufacturing industry.

Health minister Gao said the milk powder had not been exported although a small amount had been sent for "food processing" in Taiwan.

The US Food and Drug Administration has already alerted US markets to beware of Chinese-made baby formula and the World Health Organisation said it was monitoring the situation and providing "technical assistance" to China.

Taiwanese authorities on Saturday seized nearly 10 tonnes of milk powder imported from China, mainly of the Sanlu brand.

Shops across China, including global retailing giants Wal-Mart and Carrefour, have pulled the milk powder from their Friday after Sanlu issued a nationwide recall.

So far 19 people have been arrested while 78 others have been interrogated, Yang Zongyong, vice governor of the northern province of Hebei where Sanlu is based.

"Simply put ... the milk buyers add water to the milk to falsely increase the amount of milk," Gao said.

"At the same time, to ensure that the protein content of the milk is up to standard, they add melamine."

The minister said China's cabinet, the State Council, has ordered free medical care for all affected children.

He added that a series of lawsuits had been brought against Sanlu for allegedly tainted milk powder beginning in March this year and that the company had begun recalling and holding back the product then.

"But the Sanlu Group did not report to the government for a long period of time," Gao said. "The Sanlu Group must take a lot of responsibility for this problem."

Chinese state media condemned Sanlu, with the China Daily in an editorial Saturday calling the company's behaviour "appalling" and criticising government inspectors.

Among China's other safety debacles, 13 infants died in 2004 after drinking sub-standard milk powder. Chinese press said the case involved pirated Sanlu products.

earlier related report
China vows better food safety after baby milk scandal
China vowed Sunday to improve its food safety supervision after more than 400 babies fell ill from drinking contaminated milk powder, as a New Zealand company said it knew about the problem weeks ago.

Health Minister Gao Qiang called for the introduction of a new system to take food safety supervision in China "to a new level" after the scandal, in which at least one child has died.

Authorities would "strike hard against the illegal practice of selling fake milk powder," a statement on the Chinese government website said.

"We require further strengthening of supervision and management of the market for baby milk powder," it said.

The comments came as New Zealand dairy giant Fonterra said it knew its Chinese joint venture partner was selling contaminated milk last month, before reports of the scandal emerged, and urged it to issue an immediate recall.

"From the day that we were advised of the product contamination issue in August, Fonterra called for a full public recall of all affected product," the company said in a statement.

"We have continued to push for this all along. Consumer safety has always been our number one priority."

Government investigators have also said the Sanlu Group knew last month that its milk powder was contaminated with melamine, a chemical which is used to make plastics, glues and other products and can cause kidney stones.

But the company only ordered a recall on Thursday after it emerged that babies were developing kidney stones from drinking the product. At least one baby has died.

Health minister Gao said Saturday a series of lawsuits had been brought against the Sanlu Group alleging contamination as far back as March.

"But the Sanlu Group did not report to the government for a long period of time," Gao said. "The Sanlu Group must take a lot of responsibility for this problem.

"We will severely punish and discipline those people and workers who have acted illegally."

So far 19 people have been arrested while 78 others have been interrogated, according to Yang Zongyong, vice governor of the northern province of Hebei where Sanlu is based.

Government figures show 432 babies in China have developed kidney stones and one has died. Kidney stones are rare in babies and can block their urinary tracts.

The figure is likely to rise further, with the Beijing Evening News reporting Sunday that six more babies had been admitted to hospital with kidney stones.

Shops across China, including global retailing giants Wal-Mart and Carrefour, pulled the milk powder from their shelves Friday after Sanlu Group, the company at the heart of the case, issued a nationwide recall.

Melamine was also found last year in large amounts of US pet foods containing Chinese-made additives.

The renewed focus on Chinese product safety comes at a time when the Asian giant is seeing its trade surplus shrink and can ill afford questions about the quality of its exports.

While the trade surplus hit a monthly high of 28.7 billion dollars in August, it nevertheless dropped 6.2 percent in the first eight months of the year from the same period in 2007.

The US Food and Drug Administration has already alerted US markets to beware of Chinese-made baby formula and the World Health Organisation said it was monitoring the situation and providing "technical assistance" to China.

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