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The ban on a popular children's toy found to contain the illegal drug fantasy has now spread to all Australian states as well as New Zealand.
Australian authorities say the recall will cost the company involved "millions and millions of dollars".
Named as Australia's 2007 Toy of the Year, the "Bindeez" range of craft toys has been pulled from shelves nationwide after Victoria today joined New Zealand and other Australian states in imposing a formal ban on its sale.
At least two children have been admitted to hospital in New Zealand after ingesting the beads.
In Australia three children have been treated in hospital in the past 10 days after swallowing the beads.
New Zealand Ministry of Consumer Affairs spokesman Martin Rushton said the importer of the Bindeez beads had agreed to stop supplying them. Ministry officials were working with companies in the supply chain to instigate a voluntary recall.
Scientists have discovered the beads contain a chemical that breaks down into the potentially fatal drug fantasy, also known as GHB or GBH.
Authorities in New South Wales (NSW) raised the alarm yesterday, and NSW Fair Trading Minister Linda Burney said today the toy's importer, Moose Enterprise, was cooperating in talks on a national recall and refund program.
Details of the recall would be advertised Australia-wide tomorrow, or on Friday, Ms Burney said.
"We now have a national ban, every state and territory, including Victoria who came on board today, have banned the products," she told reporters in Sydney.
"There is also a voluntary recall which the company is cooperating with. A refund will be in place.
"Toy of the year, I imagine it will run into millions and millions of dollars."
Ms Burney said an investigation was also underway into how the dangerous chemical 1,4-butanediol came to replace the safe chemical 1,5-pentanediol in the manufacture of the beads in Hong Kong.
"The issue of how a dangerous substance was used in these beads and not the non-toxic substance ... that is going to take us a few more days to uncover, but I accept that is a critical thing to answer," Ms Burney said.
The minister did not rule out foul play today but she also said the chemical substitution could have been the result of "some dreadful mistake".
Once eaten, the chemical is converted by the body into gamma-hydroxy butyrate (GHB) - also known as fantasy or Grievous Bodily Harm (GBH) - which can cause seizures, drowsiness, coma and possibly death.
- NZPA
