China's quality watchdog said it has found no further problems with milk tainted by high levels of carcinogenic mildew in tests of products by major dairy producers.

Public concern was triggered this week after milk giant Mengniu Dairy Co Ltd said its Sichuan plant had destroyed products found by a government quality watchdog to contain the cancer-causing substance aflatoxin.

Aflatoxin occurs naturally in the environment and is produced by certain common types of fungi. It can cause severe liver damage, including liver cancer.

The General Administration of Quality Supervision, Inspection and Quarantine said in a statement late on Friday (December 30) that checks covering other major producers "did not discover levels of aflatoxin which exceed standards."

The companies tested included Mengniu, Beijing Sangyuan Foods Co, Yili Industrial Group Co, Nestle SA and Bright Dairy & Food Co, it said.

Fungi and the aflatoxin they produce can infect crops before harvest or during harvesting and storage. The tainted crops then enter the food chain either directly or indirectly via animal feed.

The official Xinhua news agency, citing a quality watchdog official, said the toxin had originated from cows eating mildewed feed.

The aflatoxin scare has since spread to some cooking oils and peanuts in the southern province of Guangdong.

These incidents are the latest in a string of safety scandals to hit China's food industry in recent years.

In 2008, at least six children died and nearly 300,000 became ill in China from drinking powdered milk laced with melamine, an industrial chemical added to low-quality or diluted milk to give misleadingly high protein readings.