BEIJING - THREE babies have died, more than 6,244 others have fallen ill, with 158 strickened with kidney failure after drinking tainted milk powder in China, Health Minister Chen Zhu told reporters on Wednesday.

Most of the 6,244 babies who fell ill had only slight symptoms but 1,327 remain in hospital, Mr Chen said.

Some of the formula produced by companies involved was exported, state media said.

Inspectors found the industrial chemical melamine 'in 69 batches of milk powder manufactured by 22 companies,' the General Administration of Quality Supervision, Inspection and Quarantine said in a statement posted late Tuesday on its website.

The nationwide inspection by China's quality watchdog agency took test samples from 109 companies that produce baby milk powder in China. It said another 66 companies had already stopped production, but it did not give a reason.

One company, Guangdong-based Yashili, exported its products to Bangladesh, Yemen and Myanmar, it said, but added that initial testing of samples of the company's exports turned up no trace of melamine.

In Hong Kong, food inspectors ordered a recall after melamine was found in an ice cream bar made by Shanghai Yili AB Foods. The amounts of the chemical found 'would not pose major health effects from normal consumption of the bar, however, small children should not eat it', the Centre for Food Safety said in a notice posted on its website.

It is the second crisis to raise questions about government accountability in China since the image boosting Beijing Olympics ended Aug 24.

At least 258 people died last week when a retaining wall of a waste dump at an illegal mine in northern China collapsed.

The widening scandal is an embarrassing failure for China's product safety system, which was overhauled to restore consumer confidence and preserve export markets after a string of recalls and warnings abroad over tainted toothpaste, faulty tires and other goods.

It is also the second major case in recent years involving baby formula.

In 2004, more than 200 Chinese infants suffered malnutrition and at least 12 died after being fed phony formula that contained no nutrients.

The company at the heart of the food scandal, Sanlu Group, has apologised for the tainted milk powder, which the Health Ministry says was spiked with melamine.

The company says suppliers who sold the raw milk apparently added the chemical, normally used in plastics, to make the milk appear higher in protein.

Mr Zhang Zhenling, Sanlu's vice president, has apologised but did not explain why the company took so long to inform the public about the contamination despite receiving complaints as early as March and having tests confirm the presence of the chemical in early August.

The company went public with the information after its New Zealand stakeholder, Fonterra, told the New Zealand government, which then informed the Chinese government.

Sanlu's General Manager Tian Wenhua was fired and dismissed from the company's board of directors as a result of the scandal, the official Xinhua News Agency quoted Communist Party officials as saying in the northern city of Shijiazhuang, where the company is based.

In total, four men have been arrested in relation to the tainted milk, spokesman Shi Guizhong with the Hebei Provincial Security Department was quoted as saying by Xinhua on Tuesday.

Vice Health Minister Ma Xiaowei told reporters that 1,253 infants had been sickened - mainly after developing kidney stones. Two infants also died after drinking the formula. -- AP, AFP