The minister, Chen Zhu, told reporters that Beijing would this week launch its nationwide vaccination programme, making it the first country in the world to do so, but warned that supply would likely fall far short of demand.

"There are recent developments in A(H1N1) flu and we are faced with a grim situation," Chen told reporters.

He said there had been a sudden surge in cases, emphasising that in the past week, 95 percent of new infections were domestic and not imported from abroad.

There had also been a fast rise in cluster outbreaks, Chen said, with the start of the new academic year bringing students together in close proximity.

China has so far reported 5,592 cases of A(H1N1) flu but no deaths.

One patient in Shanghai and another in the neighbouring eastern province of Zhejiang were in serious condition after contracting the disease, Chen said.

But he added the condition of the Shanghai patient was "stabilised and there are already signs of improvement". The man in Zhejiang was also stable.

The World Health Organization (WHO) said Friday that at least 2,837 people had died from A(H1N1) flu globally.

Authorities are particularly concerned there will be a second wave of the pandemic with the onset of the autumn and winter flu season in the northern hemisphere.

Chen said an additional worry was the upcoming week-long October national holiday, with huge celebrations marking the 60th anniversary of the founding of communist China and 200 million people expected to travel around the country.

"China will be facing a grim situation in the prevention and control of the A(H1N1) flu," he said.

The government plans to vaccinate 65 million people, or five percent of the total population, before year's end.

But Chen warned the production capacity of Chinese vaccine companies was limited.

"The supply will fall far short of demand if compared to the demand of 1.3 billion people," he said.

Chen said priority would be given to children aged five to 19, those with chronic respiratory and cardiovascular diseases, medical workers, quarantine officials, those working in railway and aviation sectors, soldiers and police.

He added Chinese authorities were following the progress of clinical trials abroad with regards to vaccines for pregnant women.

Chen also said authorities would launch vaccinations in priority areas -- those with a higher number of cases and cluster outbreaks "in order to provide a shield to protect the further spread of the influenza to other regions."

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