China has stepped up scrutiny of milk production, tightened dairy controls and threatened to out offenders amid a widening health scandal, state media has said.

At least four Chinese children have died and thousands have been treated in hospital after drinking melamine-tainted milk and milk formula that has led to Chinese-made products being pulled off shelves around the world.

Chinese Deputy Health Minister Liu Qian said: "We are saddened by this scandal. It is also a painful lesson for us. Melamine was deliberately added to fresh milk."

The formula was laced with the chemical to cheat nutrition tests, the latest in a long line of Chinese food and product safety scandals involving items as diverse as fish, drugs, toys, toothpaste, tyres and pet food.

An official said: "The regulations tighten control of how milk-yielding animals are bred, how raw milk is purchased and the production and sales of dairy food.

"There will also be more severe punishment for people who violate safety standards and quality control departments that fail to fulfil duties ... Law-breaking producers will be blacklisted and outed publicly."

Several local officials have already been sacked and 27 people have been arrested. More than 20 milk companies have already been named as offenders.

The official added: "Any non-food chemicals or hazardous substances are prohibited from being added into raw milk in its production, purchase, storage, transport and sale."

But the Health Ministry has released new dairy standards and safety limits for melamine -- one milligram of melamine per kilogram of infant formula, and 2.5 mg per kg for milk, milk powder and food products containing at least 15 per cent milk.

The US Food and Drug Administration said earlier this month that no amount of melamine was safe in baby formula.