Domestic water supplies to about half of the population of Foshan in Guangdong province were cut for about six hours on Saturday, Xinhua news agency said.

Local environment officials said that the water was now safe to drink after the oil pollution scare forced restaurants and businesses to close and sparked a surge in bottled water sales, according to the report.

'Tests show the water is safe to drink, but we will keep on monitoring the water quality of the river,' said an official surnamed Li with the city's publicity department, according to Xinhua.

No information was given as to how the oil slick emerged on the river, with Xinhua saying that environmental authorities had launched an investigation.

However Foshan is a major manufacturing and industrial hub, giving rise to speculation one of the many factories operating near the river may have been the source of the oil slick.

No pollutants were found in the upper reaches of the Xijiang River, which is a major water resource for Foshan and four other cities in south China, Xinhua said.

But the Nanfang Daily, a local newspaper in Guangdong, said on Sunday that Heshan city, to the south of Foshan, may now be at risk from the slick.

Three decades of unchecked industrialisation have led to massive contamination of China's water supplies and reports of polluting factories causing disruptions to water supplies emerge frequently.

More than 70 per cent of the country's waterways and 90 per cent of its underground water is polluted, according to previously released government figures. -- AFP