Beijing ? A scandal over tainted infant formula spread Monday as authorities acknowledged that as many as 10,000 babies may have ingested milk powder laced with the same chemical found in contaminated pet-food exports last year that caused scores of U.S. animals to die.

The admission cast a cloud over China’s dairy industry, and New Zealand’s prime minister accused China of covering up the contamination until she blew the whistle.

Inspectors fanned across China for rush inspections of the nation’s 175 baby formula producers to try to rebuild confidence in dairy products among stunned consumers.

Following the success of the Beijing Summer Olympics last month, the infant-formula scandal is proving an embarrassment to the government, showing it has yet to ensure food safety despite a string of global recalls last year involving Chinese products, including tainted toothpaste and key ingredients used in pet food.

Pet food exports containing melamine, which can trigger kidney failure, were linked to the deaths of hundreds of dogs and cats in the United States early in 2007.

Authorities acknowledged a jump in the numbers of babies affected by infant formula tainted with melamine, a chemical used in plastics and fertilizers that can make protein levels of diluted milk appear higher than they actually are.

So far, 1,253 babies have become ill from tainted baby formula manufactured by the Sanlu Group, and 340 of them are in the hospital, with 53 of them in serious condition, Health Ministry spokesman Ma Xiaowei said in a news conference. He acknowledged that two infants died in Gansu Province, a poor, dusty region in the nation’s arid northwest.

“As many as 10,000 infants may have drunk the contaminated Sanlu infant formula,” Ma said.

The figures marked a sharp rise from previous days, and consumer anger appeared to be mounting over apparent signs that the Sanlu Group knew of consumer complaints as long ago as March that some babies were admitted to hospitals with kidney stones, a rare ailment among infants.

Prime Minister Helen Clark of New Zealand came to the defense of the world’s biggest milk trader, Fonterra, a New Zealand company that owns a 43 percent stake in Sanlu Group, a leading infant formula maker in China. Clark said she learned of the contamination at a meeting in Wellington Sept. 5 and ordered her embassy in Beijing to raise the alarm with the central government.

“Once we blew the whistle in Beijing, they moved very fast,” Clark told New Zealand Television.