A chemical company in East China's Zhejiang province is being investigated on the suspicion that it discharged waste that polluted a local river and disrupted tap water supplies.

Zhejiang Jinzhili Chemicals Co Ltd in the city of Lin'an is suspected of contaminating the Tiaoxi River on Sunday with 12 pollutants, including benzene and alkene, the environmental protection bureau in the provincial capital of Hangzhou said in a statement on Wednesday.

The bureau is working with public security authorities to investigate the case, the statement said.

An environmental monitoring report issued on Wednesday morning said that no more pollutants have been detected in the Tiaoxi River, but it is unclear when local waterworks will resume operation.

The pollution has disrupted the operation of two downstream water treatment facilities and affected tap water supplies in Hangzhou's Yuhang district, which has a population of about 848,400.

The Pingyao Waterworks, which treats water from the Tiaoxi River and supplies drinking water for the nearby townships of Pingyao and Liangzhu, halted operation on Sunday and about 200,000 residents in the two towns were advised not to drink tap water until 4 pm on Thursday, because of the lack of alternative water sources.

Bottled water has sold out in many supermarkets in the two towns and the local government has sent water trucks to supply drinking water.

However, most residents have remained calm.

"Families with babies and pregnant women should be careful, but I think boiled water is safe," said a shopkeeper surnamed Zhou in Liangzhu.

More than 120 companies in Lin'an have now halted production due to water shortages.

Wang Feng, deputy director of the administrative office of the Yuhang environmental protection bureau, told China Daily that an emergency committee had been established by the Hangzhou government to deal with the incident.

"Our staff has spent some sleepless nights, testing the water every two hours. The samples are being sent to provincial testing departments in case our equipment is incapable of detecting the pollutants," said Wang.

Environmental monitoring reports are being updated on the Hangzhou environmental protection bureau's website every few hours. A report issued on Wednesday morning said that no more pollutants have been detected in the Tiaoxi River water intakes of the Liangzhu and Pingyao Waterworks.

The investigation of the chemical company comes on the heels of a carbolic acid leak that polluted Zhejiang's Xin'an River on Saturday.

The river is a major source of drinking water in Zhejiang and the pollution forced the temporary closure of five water utility companies.

Jiang Guoliang, a villager in Chongfu village of Liangzhu, said that villagers were rushing early in the mornings with pails to a stream carrying water from the nearby Daxiong Temple Reservoir, because "it is too expensive to use bottled water".

"The pollutants must have accumulated for several days, then have been washed to the river by a rainstorm a few days ago. Otherwise, it would have been hard to detect them," he said.