More than 6,200 babies have fallen ill after drinking formula milk made from contaminated powder, Chinese Health Minister Chen Zhu has said.
The figure is five times higher than previously announced.
Mr Chen said a third baby had now died - with the latest fatality occurring in the Zhejiang province of eastern China.
Twenty-two brands of powder have been found to contain the toxic industrial chemical melamine, apparently added to make it appear higher in protein.
Mr Chen said a total of 6,244 infants were now sick, and that the number of those diagnosed with "acute kidney failure" had risen to 158.
He said free medical care would be provided to all affected infants.
Banned substance
The government has labelled the poisonings a "level one" food safety incident and formed an emergency team to grapple with the fallout.
Tests have so far revealed that 69 batches of formula made by 22 companies were contaminated with the banned substance, officials say.
Two of the brands are exported to Bangladesh, Yemen, Gabon, Burundi and Burma - although it is not clear if contaminated batches are involved.
Companies caught up in the scandal include the giant milk company Mengniu Dairy.
It says it is recalling three batches of formula made in January, after government tests found melamine - normally used in plastics - in its product.
The dairy has also suspended trading of its shares on the Hong Kong stock exchange.
The company at the heart of the scandal, the Sanlu Group, has fired its chairwoman and its general manager, state-run news agency Xinhua said.
Chinese Health Minister Chen Zhu said all the seriously ill children had become ill after drinking Sanlu powered milk.
Correspondents say that melamine appears to have been added to fresh milk at milk collection stations, before being passed on to Sanlu.
Xinhua also reported that four officials linked to agriculture and quality control in Hebei province, where the Sanlu group is based, had been sacked.
Since the crisis emerged, four people have been arrested, with more expected. Twenty-two others are being questioned.
Parent's anger over milk scandal
Sanlu made the information about the contamination of its products public last week after its New Zealand stakeholder, Fonterra - a global supplier of dairy ingredients - informed the New Zealand government, which then told the Chinese government.
Li Changjiang, head of China's quality control watchdog, said that two companies - Yashili and Suncare - exported milk powder and they were recalling their products.
He said that melamine had also been found in a yogurt ice-bar made by Yili, one of China's biggest dairy producers, and sold in Hong Kong.
The brand has now been recalled by the Hong Kong supermarket chain Wellcome.
Mr Li, head of the state quality supervision body AQSIQ, said China would adjust its baby formula standards to allow tests for poisonous substances such as melamine.
He said tests for the substance had not been made before, because it was banned from food products.
Confidence undermined
The BBC's James Reynolds in Beijing says China is keen to try to reassure parents that it is in control of what is happening.
This scandal has undermined confidence in food safety in China and many parents are worried about what they will feed their babies, he adds.
Analysts say the incident is an embarrassing failure for China's product safety system, which was revamped after a spate of international recalls and warnings last year over a range of goods.
Meanwhile, rising public anger, expressed on China's active internet forums, is prompting reports of a crackdown by the government on reporting of the scandal.
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