The decision came after four children died in China after drinking milk contaminated with melamine.
Over 53,000 children, according to the Chinese health authorities, have been affected by tainted milk products in the country. Around 13,000 have been hospitalized, with over 100 in a serious condition.
China has already begun an inspection of all milk products, and the introduction of strict laws regarding food quality is likely to see the closure of a number of companies.
The Communist Party chief of Shijiazhuang, home to the Sanlu Group that produced the milk, has also been dismissed, Xinhua said.
Melamine has been detected in Chinese products including non-dairy items in Taiwan, local media reported on Monday, citing health sources.
Japan, Brunei, Singapore, Malaysia, Hong Kong and Taiwan have banned Chinese dairy products.
