China yesterday said a third infant had died after drinking contaminated milk, while the number of sick rocketed and an official said the health threat had been hidden for at least a month.

The number of children ill after drinking milk carrying the compound melamine had risen nearly five-fold to 6,244, and those with "acute kidney failure" reached 158, Health Minister Chen Zhu told a news conference.

A government probe announced on Tuesday showed that a fifth of the 109 dairy producers checked had been found to have produced batches of milk adulterated with melamine.

The milk scare has extended beyond the country's borders with China's quality watchdog saying two producers had exported milk powder to Yemen, Bangladesh, Myanmar, Gabon and Burundi and were recalling their products.

Earlier this week, officials said 1,253 children were ill and two had died after the country's biggest baby milk powder maker, the Sanlu Group, last week revealed its products contained melamine, which can be used to bamboozle milk quality checks.

China's products and foods have suffered repeated scandals involving toxins and flaws, in recent years, and this is not the first to involve melamine, usually used in making plastics, fertilisers and cleaning products.

In 2007, the US government found pet food ingredients imported from China were tainted with melamine.

The fresh food safety scandal, combined with claims of an official cover-up, could shake investor and consumer confidence in China's food industry.

Facing widespread public alarm, health minister Chen urged hospitals to prevent more deaths. "As far as possible, minimise the harm to infants' health from the contaminated milk powder," he said.

China is the world's second-biggest market for baby milk powder, and Sanlu has long dominated it. Based in Shijiazhuang, capital of the north Chinese province of Hebei, it is 43 per cent owned by New Zealand dairy giant Fonterra.

Sanlu last week halted production and announced a big recall. But government officials acted only after the New Zealand government pressed Beijing, New Zealand Prime Minister Helen Clark said on Monday.

Yang Chongyong, a vice governor of Hebei, yesterday said Shijiazhuang officials had delayed reporting the poisonings throughout August - when Beijing was hosting the Olympic Games.

"It should be said that the Shijiazhuang government did not announce to society in a timely way this major food safety incident," Mr Yang told reporters. "...they have a major responsibility." Sanlu kept quiet for even longer, Mr Yang said.

"We know that before they reported the problem to the Shijiazhuang government on Aug. 2 they had already covered up many of the facts," he said of Sanlu.

Fonterra chief executive officer Andrew Ferrier defended his company from criticism that it should have gone public about the threat earlier and not waited for action from China.

"They (Chinese officials) were clear about how they wanted to proceed on this recall," he said. Sanlu's tests for threats did not include melamine, he added.

"You do the best you can and sometimes something like this (happens) whether you like it or not. If somebody breaks the law and puts poison chemical in the product we're all vulnerable to that," he said.

Melamine is rich in nitrogen, an element often used to measure protein levels, and so can be used to disguise diluted milk. Four suppliers have so far been arrested for selling melamine-laced milk to Sanlu.

The other offending companies include Beijing Olympics sponsor Inner Mongolia Yili Industrial Group and Hong Kong-listed Mengniu Dairy.

Mengniu Dairy's stock was suspended yesterday, and the company said it plans to recall all "unfit" products and halt production of related product lines.

Shares in Yili fell close to their daily limit of 10 per cent yesterday. In contrast, Hong Kong's Hang Seng Index slipped 1.85 per cent and Shanghai's composite index slid 2.75 per cent.

"Consumer confidence, not to mention management credibility, are likely to take time to rebuild," Merrill's Denise Chai wrote in a note yesterday. As in past product safety scandals, the government has responded by sacking junior officials. But Li Zhiqi, a Beijing-based consultant who deals with dairy companies, said more was needed to clean up the dairy sector.

"The government has food safety measures and rules. But they're often too broad," he said. "This shows we need regulation fitted to particular industries."

Development of recent milk powder scandals

• April 21, 2004: At least 13 babies die in China's eastern Anhui Province after being fed fake milk powder with no nutritional value falsely labelled with Sanlu brand. About 190 other malnourished victims, dubbed "big headed babies" because their heads swell while their bodies waste away, are affected.

• June 9: Six officials sacked over scandal in Anhui city of Fuyang, including the head of industrial and commerce bureau and a deputy director of health. Investigation finds they failed to take steps after receiving an initial complaint about the fake powder in May 2003.

• December 1, 2005: New Zealand company Fonterra, the world's largest dairy exporter, pays $107 million for 43 per cent of Sanlu, China's top milk powder producer, following rivals into China's fast-growing milk products market.

• March 2008: Sanlu receives customer complaints that babies' urine is discoloured and some have been admitted to hospital. Company officials say they investigated and recalled some products at this time, but did not inform the government.

• May: A five-month old boy dies in northwestern Gansu province in what is later said to be first fatality linked to the chemical-laced milk.

• July: An eight-month-old girl dies after her parents remove her from hospital in second death later linked to the powder.

• August 2. Sanlu starts recall from suppliers. Fonterra says it first learnt of problem in August.

• September 5: New Zealand Prime Minister Helen Clark is informed of milk powder problem. Three days later, New Zealand officials are ordered to bypass local officials and inform Chinese government.

• September 8: Hebei provincial government is informed of problem by the government of provincial capital Shijiazhuang, where Sanlu Group is based.

• September 10: Chinese media reports that babies have fallen ill after drinking Sanlu milk formula.

• September 11: Sanlu issues recall of product made before August 6. US food and drug regulators warn that China-made baby formula, illegal in the US, may have slipped into US.

• September 12: Nationwide baby milk probe is launched in China. Shijiazhuang vice mayor says the milk was diluted with water, then melamine, a toxic chemical that makes protein levels appear high.

• September 13: First baby death from contaminated milk powder is reported.

• September 15: Second baby death is reported. Two traders are arrested in Hebei for producing and selling contaminated milk. Ms Clark says Chinese officials failed to recall the milk powder when asked to by Fonterra.

• September 17: Third infant death is reported. The number of affected infants rises to 6,244. Four city officials are sacked in Shijiazhuang. Sanlu's chairman and general manager are also sacked.