Zhao Xinchao , deputy mayor of Shijiazhuang in Hebei , said dairy farmers and milk dealers were among those questioned.

He said tripolycyanamide - also known as melamine which can cause kidney stones - was added with water to fresh milk to raise it up to 'purchasing standard' and boost profits.

He said Sanlu was aware of a problem as early as March when consumers complained of 'red' urine and kidney stones in their babies, Xinhua reported.

Sanlu, the mainland's biggest dairy producer and a state-owned enterprise, has retained 2,176 tonnes of contaminated milk powder and recalled 8,210 tonnes of the product. About 700 tonnes of milk formula was still being pulled from the market, Mr Zhao said.

Earlier this week, when mainland media revealed that many infants from rural areas of Gansu had developed kidney stones after drinking Sanlu formula, the company insisted there was no evidence its formula was to blame and pirated products could have been the cause.

Sanlu maintained that its products were certified and up to national quality standards, even as it announced that an estimated 700 tonnes of formula was tainted with melamine and all products made before August 6 was being recalled.

Angry parents gathered outside Sanlu's Shijiazhuang headquarters yesterday demanding a meeting with company bosses but were rejected.

'This kind of incident is much worse than murder! You have killed one child, how come the general director dares not meet us?' a mother shouted.

The Ministry of Health called for a national register of cases and will investigate further with the Ministry of Agriculture and Public Security Bureau. The General Administration for Quality Supervision, Inspection and Quarantine ordered a nationwide check on all milk formula.

Melamine was found in pet food exported to the US that killed dozens of animals last year. Rich in nitrogen, the chemical is believed to increase the appearance of protein content.

Additional reporting by Minnie Chan