Babies have been suffering kidney stones - rare in young children
The number of Chinese babies known to have fallen ill with kidney stones as a result of contaminated milk powder has risen to 432, officials have announced.
"This is a severe food safety accident," health ministry official Gao Qiang, said. Those responsible would be "severely" punished, he added.
Later, it was announced that 19 people had been arrested.
Tests showed the milk powder contained the industrial chemical melamine. One infant has died.
The new scare revived memories of a fake baby milk formula scandal four years ago in which at least 13 babies died.
Vow to punish
"As of 12 September, there are 432 cases of kidney stones in the urinary systems of infants according to reports from health departments nationwide," Gao Qiang said.
"None of the milk powder was exported to other countries or regions," Mr Gao said.
"Only a fraction of the milk powder was sold to Taiwan for food processing," he added.
Gao Qiang said the Sanlu Group had been ordered to halt production after its products were found to be responsible.
"We will severely punish and discipline those people and workers who have acted illegally," Mr Gao said.
Melamine is a toxic chemical used in plastics, fertilisers and cleaning products.
Sanlu ordered a recall of 700 tonnes of contaminated milk on Thursday
New Zealand-based dairy product company Fonterra Cooperative Group Ltd, a part-owner of Sanlu, ordered a recall of about 700 tonnes of powder contaminated with melamine believed to be in circulation.
Melamine has been used by Chinese suppliers of animal feed components to make them appear to have more protein.
It was linked to the formation of kidney stones and kidney failure in pets in the United States last year, leading to thousands of deaths and illnesses.
A fake milk powder scandal in 2004 killed at least 13 babies in the eastern province of Anhui.
Investigators found that the milk given to these babies had no nutritional value, and the resulting scandal triggered widespread investigations into food safety.