About 53,000 children have been made ill from drinking milk contaminated with melamine, China's Health Ministry has admitted.
It says most were treated as outpatients and sent home, but 13,000 remain in hospital - 104 of them seriously ill.
Four babies have died after consuming the nitrogen-rich compound, which can cause kidney stones and lead to renal failure among children.
The Chinese government is now trying to show that it is on top of the poisoned milk crisis and also that it cares. Premier Wen Jiabao has been seen on state-run televison visiting a Beijing children's hospital, talking to parents and apologising.
"We must make the physical health of the public a priority," he said. "The most crucial point is that after a clean-up there can be no problems at all with newly produced milk products. If there are fresh problems, they must be even more sternly punished under the law."
A girl in Hong Kong diagnosed with a kidney stone at the weekend is the first reported case outside mainland China. The government says the three-year-old drank milk from the Yili brand, but is in a good condition and has been discharged from hospital.
The contamination scandal was first identified in baby formula produced by the Sanlu Group, which is 43% owned by New Zealand dairy giant Fonterra.
It is thought melamine was added to watered-down milk to help it pass quality inspections. The toxin has also been found in popular brands of regular milk, yoghurt and ice-cream in China.
The World Health Organisation has condemned China's handling of the milk scandal, suggesting there has been a cover-up.
MFAT defends actions
New Zealand's Ministry of Foreign Affairs and Trade is defending the weeks it took its embassy in China to tell the New Zealand Government about the contaminated baby formula.
Fonterra told the New Zealand embassy in Beijing about the problem on 14 August, but the ministry in Wellington did not receive the information until 1 September.
The ministry's director of the Asia Division, David Taylor, said Fonterra and the embassy struggled to collect detailed information from Chinese managers and officials.
Mr Taylor said the embassy wanted to be sure of the facts and knew it would be irresponsible to report inaccurate information.
New Zealanders working for Sanlu are still in China and are not in danger of being arrested by authorities, he said.
The New Zealand embassy knew of tainted Sanlu milk powder in mid-August, but says it did not make an official report because it lacked information.
MFAT said the New Zealand embassy in China was told informally by Fonterra on 14 August that there had been reports of a small number of sick children and Sanlu appeared to have been receiving milk contaminated with melamine.
The ministry said at this time the embassy did not have enough information to send an authoritative report to Wellington.
On 22 August, Fonterra told the embassy Sanlu did have a problem and local authorities had been urged to begin a full product recall.
The embassy and Fonterra continued to communicate between 23-29 August about the way the problem was being handled.
Fonterra China told the embassy about discussions with their joint venture partner and the local authorities, and efforts to achieve recall of Sanlu products.
New Zealand's Trade Minister Phil Goff was briefed on the issue on 2 September.
An officials group was convened by MFAT involving the New Zealand Food Safety Authority, the Ministry of Agriculture and Forestry, the Department of Prime Minister and Cabinet and New Zealand Trade and Enterprise.
A formal report was finalised on 5 September and a top-level New Zealand Government meeting took place on 8 September.
On 9 September the embassy in Beijing contacted relevant central government agencies in China to convey the views and concerns of the New Zealand Government.
Prime Minister Helen Clark told the ABC on Saturday that Fonterra had responsibilities and should focus on helping the sick children. She said the matter will probably be fully analysed in the future.
Tests show Nestle product tainted
Hong Kong earlier ordered a recall of Chinese powdered milk made by dairy giant Yili after discovering it contained melamine.
On Sunday supermarkets pulled some milk powder products, including those from Swiss giant Nestle, from their shelves.
Nestle said it was confident none of its products have been made with melamine-laced milk. Tests done by government-approved labs showed the product in question was melamine-free, it said.
However, Hong Kong's food safety centre says later tests showed that another product, Nestle Dairy Farm Pure Milk, contained the harmful substance.
It said the product is used by caterers and has asked suppliers to stop selling the product and to recall it.
Nestle declined to comment on the food safety centre report.
UN wants full investigation
The World Health Organisation has asked the Chinese authorities to explain why it took months for the tainted milk scandal to be made public.
The UN children's agency UNICEF has asked Chinese authorities to launch a full investigation into the matter.
Brunei has banned imports of Chinese milk products after similar moves by Singapore and Malaysia.
Meanwhile, Chinese officials have ordered an all-out effort to save babies who have been made ill by contaminated milk products.
The State Council, or cabinet, has also called on medical authorities to give free examinations and treatment to infants affected by the tainted milk products. It has also called for more screening to take place in remote areas.
Panicked parents have crowded hospitals in China and demanded redress since officials and Sanlu said last week that babies were sick with kidney stones and complications after drinking toxic milk powder.
Beijing has already recalled some milk powder exported by two firms whose products were contaminated, though it said "there has been no bad reaction" to those goods.
The escalating scandal has triggered sacking of officials and the detention of a sacked Sanlu executive, Tian Wenhua. Police have arrested four people, including two dealers in Hubei province.