Nearly half of China's dairies are being shut down after their licenses were revoked, the government's quality inspection agency said.
It is the latest attempt to clean up the scandal-plagued dairy industry after repeated instances of contaminated milk, including an incident in which children died.
The agency said 533 of the country's 1,176 dairy producers have been ordered to cease operations.
Only 107 of those failing producers will be allowed to apply anew for licenses once they improve quality controls, the agency's online statement said.
The government ordered a full-scale review of dairy licenses late last year after yet more contaminants appeared in milk supplies despite periodic clean-up campaigns.
Official action and public outrage date back to 2008 when milk products made children ill and at least six died.
An investigation discovered that milk suppliers were adding the industrial chemical melamine, which is used to make plastic. Hydrolysed leather protein, which is made from leather scraps, was found in milk this year.
Both additives allow watered-down milk to appear to have normal levels of protein.
While the government announcement did not identify which dairy producers will be shut down, previous reports in state media said the campaign was mostly directed at smaller companies.
Only larger dairies are likely to be able to afford the specialised equipment that tests for additives such as melamine which the government is making all producers install.