Chinese standards state that every 100 grams of milk powder, for infants and young children, is allowed to contain 30-150 micrograms of iodine; the content of iodine found in Nestle's Jin Pai Growing 3-Milk Powder was slightly higher than the 150 mg maximum, say the authorities.
Taking in excessive iodine can lead to a swollen thyroid gland.
''We apologise for the mistake in deviating from the national standard,' the Vevey, Switzerland-based company said in statement, reports Bloomberg yesterday.
Nestle said it has increased the frequency of iodine testing to avoid a reoccurrence of the problem.
At the end of May officials in the Zhejiang administration of Industry and Commerce identified the excessive levels of iodine in the Nestle product, the first time such levels had been identified in recent years.
Nestle has removed the banned products from sale in cities including Shanghai, Guangzhou and Hangzhou.
Chinese consumers are particularly alert, and sensitive, to safety issues linked to infant foods following the deaths from malnutrition of over ten babies last year after drinking fake milk powder.