Authorities in Yancheng, located in Jiangsu province, took action after "a strange smell" was noticed in the city's drinking water, said a statement on the municipal government's website.

It said water supplies were contaminated when a factory released an industrial chemical that can cause cancer in humans into the local river. The water then entered a city treatment plant.

"The plant's water supplies were contaminated by hydroxybenzene and rendered unsuitable for drinking," the statement said.

"Initial findings by the city's Environmental Protection Bureau found that the pollution was caused by a release from a chemical factory upstream."

In a brief dispatch, Xinhua news agency said water supplies were restored in the early afternoon.

Neither the government nor press reports mentioned any illnesses among the population from the contaminated water.

The statement said the city had raised output at another water plant and had increased pumping from wells to ensure water supplies.

Chemical spills with serious health consequences are common in China.

In 2005, a massive chemical plant spill into northeast China's Songhua River resulted in drinking water supply cuts affecting millions of residents in Heilongjiang province.

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