Aokelai Power Co Ltd, formerly Zeliang Battery Factory, was just 30 meters from the staff quarters of Jicheng Aluminum Factory, where the children were living in Yinyuan industrial district, Longtang town in Qingyuan city economic zone, Guangdong province, said an official with Qingyuan Municipal government.

Zhang Ling, from the central Henan province, who had been a fruit vendor at the gateway of Yunyuan community, said her year-old son, Liangliang, was tested after he lost his appetite.

The lead level in the boy's blood was 320 micrograms a liter, far exceeding the recommended maximum safe level of 100 micrograms a litre.

Xinhua reporters visited 10 families in the area and nine had members who were found to have excessive blood lead levels. In one family of four, three members had excessive lead levels.

An investigation by Nanfang Daily newspaper early this month found 44 children had excessive lead levels.

However, residents told Xinhua the number could be much higher as many families with children had moved away.

The residents said there used to be more than 300 families and most had a child.

Qingyuan municipal government set up an investigation team headed by vice mayor Shi Fangfei on Friday.

The lead concentration of the company's water discharges were tested by the provincial environmental monitoring center and exceeded provincial standards, but gas emissions tested safe, on Friday night.

"The lead pollution source can be confirmed to be the battery factory," said He Guoxiong, vice leader of the investigation team and director of Qingyuan Municpal Environmental Protection Bureau.

The company stopped discharging waste water and gas after being ordered to shut down for rectification by the environmental protection bureau on Saturday.

The municipal government Monday began to organize health examinations for the children, an official said.