Two managers of a chemical company have been arrested over a spill that led to the suspension of drinking water supplies for hundreds of thousands of people in a Chinese city, state press said Monday.

The two officials of the Biaoxin Chemical Company were arrested on charges of causing large-scale environmental pollution that forced water supplies for large parts of Yancheng city to be cut off, Xinhua news agency reported.

The plant has also been ordered closed, it said.

The incident first came to light when residents of Yancheng, which has a population of 1.5 million, reported foul-smelling water coming out of their home taps on Friday last week, Xinhua said.

Initial reports indicated residential drinking supplies were only interrupted for seven hours, but the government said water services for up to 200,000 people only returned early on Monday morning.

"After repeated tests... tap water now meets state health standards in every category," the Yancheng government said in a notice on its website on Monday.

Despite the clean bill of health, the government urged residents to run their home taps for 20 minutes to ensure that all polluted water was flushed from pipes, it said.

Water fees for people in the city would be temporarily waived.

The toxic chemicals of most concern were hydroxybenzene, which can cause cancer, and the disinfectant phenol, according to the government and state press reports.

The two men arrested for the spill were the plant manager and the firm's legal representative.

Authorities in Yancheng, in eastern China's Jiangsu province, have also ordered all chemical factories with facilities bordering a river that serves as the source of the city's drinking water to be moved, the government said.

However such directives are often ignored in China.

According to the China Youth Daily, the incident occurred when waste water from the Biaoxin Chemical Company's sewage pond flooded the river.

Locals near the company, which produces chlorine products, have complained about pollution from the enterprise for years, it added.

Chemical spills with serious health consequences are common in China.

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