China is hunting for nearly 100 tonnes of tainted milk powder that was supposed to have been destroyed after a 2008 scandal over the deaths of six babies, state media said on Monday.

Dairy products containing the industrial chemical melamine have been turning up again in stores in China, more than a year after the authorities had declared the threat from tainted milk over.

Two dairy firms in the northern Ningxia region were closed down Saturday for selling contaminated milk powder, and candies made with powder were found in the northeastern province of Jilin, the China Daily said.

Melamine is used in the manufacture of plastics, fertilisers and adhesives and can cause kidney stones and other urinary problems if ingested.

Police in Ningxia found that a company outside the region gave one of the dairy firms around 170 tonnes of tainted milk powder left over from the 2008 scandal as debt payment in July last year, the report said.

The firm involved - the Ningxia Tiantian Dairy company - then repackaged nearly all of the powder and sold it to five factories in northern and southern China, the report added.

Only 72 tonnes of powder have been recovered and authorities are tracking down the rest.

It was unclear whether the dairy firm knew the product was contaminated.

"As a small company, the Tiantian dairy company doesn't have a machine to test melamine," Zhao Shunming, secretary general of the Ningxia Dairy Industry Association, was quoted as saying.

"Such a machine can cost up to one million yuan (about 145,000 dollars)... But their repacking of the products is illegal," he added.

The Ministry of Health, the State Food and Drug Administration, and China's food safety watchdog all declined immediate comment when contacted by AFP.

A string of reports have said leftover milk powder had resurfaced and was being distributed more widely than thought, raising new doubts about China's food safety monitoring systems.

At least six babies died and another 300,000 fell ill in 2008 after consuming dairy products with melamine, which the authorities said was added to give the appearance of a higher protein content.

The scandal prompted China to order a massive recall of milk powder, hitting many dairy firms that had bought products they thought were safe.

A total of 21 people have reportedly been convicted over the 2008 scare. Two have been executed and others given jail sentences ranging from two years to life.

Wang Huaibao, former deputy head of the Dairy Association of China, said the re-emergence of the problem pointed to lax government oversight and the desperation of milk firms caught up in the scandal.

"It has already been a year and a half since the melamine incident, showing that the safety consciousness of government agencies remains lacking," Wang told AFP.

The government has dispatched inspectors to 16 provinces to check if tainted products have slipped on to the market, state media reported last month.

Police have arrested at least three people in the new crackdown.

"Flaws in the previous system led to the current chaos," Zhao was quoted saying. "What if companies with tainted milk also hold back their stocks for this round of checkups and re-use them later, just like what's happening now?"