The two companies, which have been closed down, discharged waste water with various types of arsenic content more than 1,000 times the permitted level into the Xinqiang river in central China's Hunan province, Xinhua said.

Their unbridled polluting activities had been going on for a "long time", the report said, underscoring the serious challenge the world's most populous nation faces in cleaning up its environment.

According to Pan Yue, the deputy director of the State Environmental Protection Administration, Haoyuan had been dumping an astounding 50,000 tonnes of waste a month into the river, while Taolin contributed 280 tonnes a month.

Pan did not say how many managers were arrested or provide their names, but said they could face criminal punishment.

The two enterprises would also be slapped with harsh penalties, Pan said, without providing further details.

China is working to step up environmental protection after a string of environmental accidents along its waterways.

The most severe was an explosion at a benzene plant on November 13 in the northeastern province of Jilin. It was covered up by local officials for more than a week.

The environmental protection administration plans to make information on polluting accidents public as soon as they happen, amid efforts to raise environmental awareness.

Long known as a toothless body, the administration is beginning to wield greater authority nationally but remains challenged at the local level, said Ma Jun, an environmentalist specializing in water issues at Beijing's Institute of Public and Environmental Affairs.

"There is a huge problem in the contradictory interests at the local level between economic development and environmental protection," Ma said, adding that district environmental bureaus were subordinate to the local authorities.

Water pollution accidents occur almost every other day in China because chemical plants and factories are often built near rivers, the State Environmental Protection Administration has said.

China's waterways were polluted by industry 130 times in the 300 days since mid-November last year.

Pan blamed poor environmental awareness among local officials and the "irrational" distribution of industry, with more than 20,000 chemical plants built along rivers.

"The main reason (is) not enough consideration was taken concerning the protection of the environment and the capacity of localities to handle pollution," Pan said.

The companies in Hunan's Yueyang county affected by the arrests did not have treatment facilities nor basic environmental assessment certificates.

Monitors found arsenic trioxide in the Xinqiang river last week, which can lead to vomiting, stomach pain and even cancer and death, the report said.

No casualties were reported, but authorities implemented an emergency after 100,000 people were left without drinking water.

Environmental pollution cost China 511.8 billion yuan (64 billion dollars) in economic losses in 2004, amounting to 3.1 percent of total economic output that year, according to a previous report by Xinhua.

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