China has suspended all new railway construction projects as controversy swirls over the nation's high-speed network nearly three weeks after a fatal crash.

Rail authorities said late on Wednesday they had also cut the speed of trains running on newly built "bullet" lines and would conduct safety checks on all existing high-speed links as well as those under construction.

"We will suspend for the time being the examination and approval of new railway construction projects," the State Council said in a statement.

The government will also "thoroughly" examine projects that have already been submitted for approval, it added.

Developing the world's largest high-speed rail network has been a key political goal for Beijing, but the death of 40 people in a collision of two high-speed trains on July 23 provoked public outrage.

The crash - China's worst rail accident since 2008 - triggered a flood of criticism of the railways ministry and sparked accusations that the government had compromised safety in its rush to develop.

Even China's official media weighed in, with the People's Daily newspaper saying the country did not need "blood-soaked GDP".

"We feel deep guilt and sorrow about the tragic losses of life and property in the accident," Sheng Guangzu, the railways minister, said in the statement issued after a State Council meeting.

Corruption allegations

The railways ministry announced on Thursday that trains designed to run at a maximum speed of 250 kilometres per hour would instead be limited to 200kph, impacting ticket prices and network timetables.

China has the world's biggest high-speed rail network. It reached 8,358km at the end of 2010, and authorities had planned for it to exceed 13,000km by 2012 and 16,000km by 2020.

In December 2010, the railways ministry announced that a Chinese train had reached a speed of 486kph, smashing the world record for an unmodified train. Earlier this year, however, cracks started to emerge.

Authorities decided to limit speeds on the network to 300kph, following allegations of high-level corruption in the rail sector.

Then railways minister Liu Zhijun was sacked in February over graft charges, after he allegedly took more than $125 million in kickbacks over several years on contracts linked to the network.