Hong Kong's government said on Monday two children had now been diagnosed with kidney stones after drinking the contaminated milk.
All of the children affected consumed baby milk formula believed to have been contaminated with melamine - a toxic chemical used in plastic manufacturing.
The head of China's product-quality agency, Li Changjiang, resigned on Monday, becoming the highest-level official to be embroiled in the scandal that has left China's dairy industry reeling.
Li had overseen the ministry-level product-quality agency during a wave of scandals that have tarnished China's manufacturing reputation.
Wu Xianguo, a senior official in Shijiazhuang city - where tainted milk powder first surfaced - was also sacked, the state-run Xinhua news agency said.
Eighteen people have been arrested in the scandal, while dozens have been detained for questioning, state media have said.
Melamine is rich in nitrogen and as a result can be added to water-diluted milk to fool quality checks which use nitrogen levels to measure protein content.
Consuming the chemical can cause kidney stones and other painful complications.
On Sunday Wen Jiabao, the Chinese premier, visited hospitals in Beijing in a bid to reassure an anxious public that the government was acting.
"If there are fresh problems, they must be even more sternly punished under the law"
"The public is worried, doctors are worried, and we're also worried," Wen told parents and staff, according to the Xinhua news agency.
"The most crucial point is that after a clean-up there can be no problems at all with newly produced milk products. If there are fresh problems, they must be even more sternly punished under the law."
The government has promised free treatment for children affected by the scandal, but many parents have said they are worried about costs and long-term complications.
So far Chinese authorities have recalled milk and dairy products from 22 companies after samples were found to contain melamine.
But on Sunday, a senior World Health Organisation official criticised the Chinese government for not acting fast enough or being transparent enough.
Li Changjiang, China's product-quality unit chief, stepped down after the scandal [AFP]
"It seems that some people already knew about this problem for sometime but did not share the information," said Doctor Shigeru Omi, the WHO director for the western Pacific.
Most of the infants affected are thought to have children consumed formula from one company, the Shijiazhuang Sanlu Group. The head of the group is one among those arrested.
Meanwhile, China's food quality watchdog said it had found melamine in nearly 10 per cent of milk and drinking yoghurt samples from three major dairy companies: Mengniu Dairy Co, the Inner Mongolia Yili Industrial Group and the Bright group.
The scare over Chinese dairy products has also spread beyond China itself with several countries including Brunei, Singapore, Malaysia, Japan, Hong Kong
and Taiwan all imposing import bans.
In Singapore on Sunday, food safety officials announced that White Rabbit candy, a popular Chinese brand of milk sweet, had been found to be contaminated with melamine.