A POPULAR children's toy found to contain a chemical that the human body turns into the party drug "fantasy", or "GHB", has been banned in three states and is being recalled by its Melbourne creator.

With the Melbourne Cup holiday yesterday, the Brumby Government is yet to decide whether it will follow NSW, ACT, South Australia, Western Australia and the Northern Territory in banning the award-winning craft toy called Bindeez.

Three children, two in NSW and one in Queensland, have been admitted to hospital in the past 10 days after ingesting the toy's beads.