Even "safe" levels of lead can damage children's IQ, researchers have suggested.
The younger a child is, the more vulnerable it is to the effects of lead
The US study found children's intellectual development can be affected even if blood-lead concentration is below the level of 10 micrograms per decilitre, about 100 parts per billion, the accepted level according to US and UK experts.
Scientists from Cornell University in New York followed 170 children for five years.
Levels of lead in their blood were checked every six months, and their IQs tested at three and five years of age.
The level of 10 mcg/dl was set in 1991 based on findings linking lead at that level to lowered intelligence and children under-performing at school.
Most studies have looked at the effects of lead levels which are higher than the recommended limits.
But this new research found most of the damage to intellectual functioning occurred at concentrations below the 10 mcg level.
If you've got a child who's licking and sucking things, they can ingest quite a large amount of lead
Dr Gill Lewendon, UK researcher
The IQ scores of children with blood-lead levels of 10 mcg/dl were around 7 points lower than for children with lead levels of 1 mcg/dl.
An increase in blood lead from 10 to 30 mcg/dl was linked to relatively small falls in IQ of 2 to 3 points.
Researchers took factors such as maternal education, IQ and income as well as prenatal exposure to tobacco and the level of intellectual stimulation in the home into account.
Children's blood-lead concentrations have fallen by more than 80% over the last 30 years, but poorer children are usually the worst affected.
Old housing can have high levels of lead in the paint used.
If it cracks or peels, particles can fall onto floors and onto children's toys.
Children can ingest the lead particles when they put contaminated toys and fingers into their mouths.
In the US, around one in every 50 children aged between the one and five has a blood-lead level above 10 mcg/dl, but one in 10 has blood-lead levels of 5 mcg/dl or higher.
Charles Henderson, a senior researcher in the Department of Human Development at Cornell University worked on the study.
He said: "Because most prior research focused on children with higher exposures than in our sample, we suspect those investigators could estimate only the damage that occurs after blood lead has reached 10 mcg/dl - unaware that substantial impairment may occur at lower levels."
Mr Henderson added: "While these findings are based on a single sample and will need to be replicated in further studies, we found that the relation between lead and IQ was very consistent at 3 and 5 years of age."
He said: "It appears that many children are passing their lead test but failing to escape the adverse consequences of low-level lead exposure."
Dr Gill Lewendon, acting director of public health for North and East Cornwall Primary Care Trust, has carried out research looking at the effect of lead on children.
She told BBC News Online: "This is even more research that suggests there's actually no safe level of lead in the blood."
Dr Lewendon said the UK had been very successful in reducing lead levels by introducing lead-free petrol and taking lead out of paint.
But she added: "If you've got a child who's licking and sucking things, they can ingest quite a large amount of lead.
"Statutory agencies such as environmental health officers can help by issuing advice, but it's often up to the individual."
She said if families were worried, they could have lead levels in their water checked if they had lead pipes.
But she said they could take small steps which would reduce lead exposure, such as running taps first thing in the morning before making up baby-milk to get rid of a build-up of lead in the water overnight.
If lead paint was being removed, she said children's toys could be washed more frequently so lead particles would not settle on them and then be ingested by the child.
The research is published in the New England Journal of Medicine.