By the end of next year, it said, all restaurants in the city should have installed oil separating equipment, enabling them to separate oils and water in cooking waste and sell the pure oil to collectors.

At present, some restaurants dump the waste oil into drains, where it is collected by unlicensed workshops, which sell it to restaurants.

The Ministry of Public Security led raids last month that saw 32 people detained for reprocessing and selling more than 100 tonnes of 'gutter oil', smashing a criminal network operating in 14 provinces. The ministry said oil confiscated in the raids contained several kinds of toxins, some of which could cause cancer.

Mainland cities have vowed to crack down on 'gutter oil', with Beijing pledging in July that restaurant owners who buy or use it will be prosecuted.

The Shanghai Morning Post said restaurants preferred to sell their waste oil to unlicensed workshops, which resell it for industrial use, rather than legal oil-processing enterprises, because they pay more. It said the two major oil-processing plants in Shanghai were not able to secure sufficient supplies of waste oil.

The Shanghai authorities would boost evening inspections in areas around restaurants and would also examine more oil samples, the circular said. Private enterprises will be encouraged to collect or process waste oil.

Professor Li Duo, a food safety expert at Zhejiang University, said Shanghai was moving in the right direction, but would have to make sure the measures were implemented properly if it hoped to stamp out the practice.

He Dongping, of Wuhan Polytechnic University, who has studied 'gutter oil' for years, estimated that about three million tonnes of it were used in restaurants across the mainland each year, the China Youth Daily reported. He said 22.5 million tonnes of edible oils were consumed on the mainland each year.