Lack of Vitamin A can cause childhood blindness
Thousands of children have also fallen ill after being given a syrup containing Vitamin A as part of a programme organised by the Indian authorities and subsidised by the UN children's organisation, Unicef.
The BBC's Subir Bhaumik in Calcutta says there are fears that the numbers affected could rise.
Lack of Vitamin A is one of the biggest causes of blindness in childhood.
Inquiry
The worst cases were reported from the southern district of Silchar, where all the deaths took place.
However, Assam Chief Minister Tarun Gogoi played down the tragedy and told the BBC that only one child had died.
He said he had ordered an inquiry.
Hundreds of thousands of children were administered the Vitamin A dose on Sunday in the day-long drive.
Within a few hours of receiving the dose, hundreds of children were taken ill and admitted to hospitals.
'Outdated stock'
Non-governmental organisations in Silchar who assisted the government in the campaign say outdated stock were possibly supplied in some areas.
"Maybe the Vitamin A quota supplied to Assam was not checked properly as should be the practice when it involves a mass immunisation programme," Anil Sharma, a child specialist, was quoted as saying by the AFP news agency.
But the director of Assam's health services said the medicine was not contaminated and added the children may have been given an overdose.
"There must be something wrong with the amount of medicine given to the children, Dr BC Kro said.
Doctors fear that some of the sick children may die increasing the casualties.
Emergency medical camps have been set up in the worst affected districts to treat the children.