The chemical melamine was found in the tainted milk and dairy products made by China's three largest dairy firms. Four children have died from the poisoned milk, more than 100 are gravely sick and almost 13,000 are still confined in hospitals.
Li's resignation was accepted by the cabinet. He will be replaced by Wang Yong, a senior cabinet official.
Chinese Premier Wen Jiabao visited sick patients in hospitals in Beijing over the weekend. He threatened severe punishments on the culprits. "The public is worried, doctors are worried, and we're also worried... What we are trying to do is to ensure no such event happens in the future, by punishing those responsible. None of these companies lacking professional ethics or social morals will be let off," the premier was quoted by Xinhua.
The Sanlu Group, the largest infant powder milk maker in China, was aware of the the problems with melamine content of their products for over a month, but hushed because Beijing was hosting the Summer Games.
On Monday, the World Health Organization called for stricter monitoring of the milk industry. Hans Troedsson, WHO representative, said, quoted by Xinhua, "It is important to know if information was withheld, where and why it was withheld. Was it ignorance by provincial authorities or was it that they neglected to report it? If it was ignorance there is a need to have much better training and education. If it is neglect then it is of course more serious."
Following the health scare, several Asian countries prohibited the sale or recalled Chinese milk products, including Japan, Brunei, Singapore, Malaysia and Taiwan.
