A fresh scandal over toxic milk products has shocked Chinese consumers, with state media today reporting claims that officials waited almost a year before warning the public.

The government pledged to clean up the dairy industry in autumn 2008, when 300,000 babies were taken ill and six died after drinking melamine-tainted Sanlu-brand infant formula. The issue reared its head again last week when food safety authorities in Shanghai announced they had shut down the Shanghai Panda company after discovering it was producing condensed milk and milk powder laced with the same chemical.

The China Daily newspaper suggested today that officials began investigating the company as early as February last year. Chinese press said Shanghai Panda was among more than 20 dairy firms found to have melamine in their products during the Sanlu scandal, but was allowed to resume production after promising to improve product safety.

But China Daily reported claims that problems surfaced again in December 2008 and officials began investigating two months later, citing documents from prosecutors in Fengxian district, Shanghai. The firm's board chairman, general manager and deputy general manager have been arrested.

"The case was not allowed to be released to the public," Shen Weiping, of the prosecutors' office, told the newspaper. "The three executives will be prosecuted in a week for producing and selling fake or substandard products."

Yan Fengmin, of the general administration of quality supervision, inspection and quarantine, told the newspaper that the case was withheld because it was under criminal investigation by police.

He said both the administration and the Shanghai government were informed immediately after the case was found, and all harmful products were seized. It is not clear when officials began recalling them.

Wang Dingmian, former director of the Dairy Association of China, told the Global Times newspaper that he believed the problem was linked to the earlier scandal. "Some local governments didn't destroy [tainted products] completely. Some producers recycled and sold them again illegally," he alleged.

Yan denied that such materials were involved in the new case, saying local governments had overseen the destruction of all recalled products.

Melamine, used in the production of plastics and fertilisers, gives the illusion of higher protein levels in nutrient tests. A dairy farmer and milk salesman were executed for their roles in the Sanlu scandal in November.