A newborn baby has died and 14 others are suffering from blood poisoning after they were infected by a contaminated batch of liquid food distributed to intensive care units across London and the south-east of England.

The babies were in neonatal intensive care units in six separate hospitals because they were premature, poorly and vulnerable and too frail to be fed by mouth. The liquid food was being administered by drips. The units had all received supplies from the same batch of liquid feed from a specialist company based in north-west London, ITH Pharma Limited.

The emergency developed rapidly over the weekend with one baby after another falling ill, triggering a frantic search to identify the source of the bacteria causing the life-threatening septicaemia.

The 14 babies that survived were responding to antibiotics but still poorly, said Public Health England (PHE), and had underlying problems that made them even more vulnerable.

The first case occurred in Chelsea and Westminster hospital on Friday and was reported to PHE on Saturday, when staff failed to find a reason for the symptoms, which resembled very severe food poisoning. Over the weekend the hospital identified further cases.

By Monday babies with septicaemia were being reported by Guy's and St Thomas' NHS trust where one of the babies subsequently died.

In total there have been four cases at Chelsea and Westminster, three at Guy's and St Thomas' and another baby became ill at the Whittington hospital, also in London. Experts thought the problem could be restricted to London until Brighton and Sussex University hospitals trust reported three cases, Addenbrookes in Cambridge two cases, and Luton and Dunstable University hospital two more. It was not until the early hours of Wednesday morning that the contaminated batch of liquid feed was identified as the problem.

"Initially they were looking at the environment – at the taps and the laundry," a PHE spokeswoman said. But with no clues from the physical environment, attention turned to the parenteral nutrition (intravenous feeding). "Doctors were asked what feed they had used," said the spokeswoman, identifying the potential source.

The neonatal units had all received supplies from the same batch of liquid feed supplied by the specialist company ITH Pharma Limited. Investigators from the MHRA (Medicines and Healthcare Products Regulatory Authority) contacted company staff early yesterday. Discussions with the staff established that an incident had taken place at the factory which could have led to contamination with a bacterium known as Bacillus cereus, which is safely carried on the skin but can cause food poisoning if it enters the gut or septicaemia if it enters the blood stream.

"This is a very unfortunate incident and PHE have been working closely with the MHRA to investigate how these babies could have become infected," said Professor Mike Catchpole, in charge of the incident at PHE. "Given that the bacteria is widely spread in the environment we are continuing to investigate any other potential sources of infection. However all our investigations to date indicate that the likely source of the infection has been identified. We have acted quickly to investigate this issue alongside the MHRA and we have taken action to ensure that the affected batches and any remaining stock of this medicine is not being used in hospitals."

The feed has only a seven-day life and the batch expired on 2 June. Experts from the MHRA are now inspecting the plant where the feed was manufactured to try to establish exactly what happened.

"All three babies affected have responded to treatment and are progressing well," said Brighton and Sussex University Hospitals NHS trust. "We have spoken with the parents of the three babies and have prepared a briefing note for all other parents of babies on the unit."

Late on Wednesday ITH Pharma issued a statement through lawyers saying it was "very saddened to hear about the death of a baby in hospital, and that 14 others are ill with septicaemia".

"ITH Pharma is a specialist manufacturer of parenteral nutrition, which is given to babies in neo-natal intensive care units. The products in question, which are no longer in circulation, are made to order for individual patients on a daily basis, in response to bespoke orders from hospitals.

"We are co-operating fully with the MHRA in the investigation, and are doing everything we can to help them establish the facts in this case as quickly as possible."

Chelsea and Westminster NHS trust said all four babies affected there were responding to treatment. "Every baby on the unit has been screened for this bacterium as a precaution and even more stringent infection control measures have been put in place. Initially admissions to the unit were restricted but we are now returning to full operational capacity," it said in a statement. "The Trust took immediate action and were the first to inform Public Health England as soon as the problem was identified and we continue to work closely with them to investigate this issue."

Dr Jennifer Birch, clinical director for neonatal intensive care at Luton and Dunstable University hospital, said: "We are informing all the parents whose babies are being cared for in our neonatal intensive care unit about this situation. We are reassuring them that the infection does not spread from baby to baby. The two babies who have been infected are being treated with antibiotics and we are using an alternative type of parenteral nutrition."