The European Commission said it was preparing an "explicit, total" ban on all products originating from China for infants and young children containing milk, a spokeswoman told journalists.
The measure was intended "to ensure that such products are not imported in any form," she said.
China does not export dairy products such as milk or yoghurt to the European Union, but it does send food items containing milk, such as biscuits and chocolate.
Altogether 53,000 Chinese children have been sickened and four have died after drinking milk containing the industrial chemical melamine.
Melamine is mainly used for manufacturing plastic but when added to milk, the toxic chemical can make it appear richer in protein.
"Based on what we've seen in the press I would say, this looks like an attempt to deceive the public by milk producers who seem to be trying to water down their milk," said Dale Rutstein, a Beijing-based spokesman for UNICEF, the UN's children agency.
UNICEF earlier issued a statement with the World Health Organisation, saying it had "observed with great sadness and concern the unfolding story of tainted infant formula produced by Sanlu and other companies."
"Whilst any attempt to deceive the public in the area of food production and marketing is unacceptable, deliberate contamination of foods intended for consumption by vulnerable infants and young children is particularly deplorable," the statement said.
India and Libya Thursday banned imports of Chinese milk products, while Gabon said it was sending back tens of thousands of boxes of contaminated milk powder.
Togo and Benin also halted imports along with Suriname, where Chinese-made sweets were stripped from supermarket shelves.
More than a dozen countries had already ordered such bans or taken other steps to curb consumption. So far, the only five cases outside mainland China of children falling ill through tainted milk have been reported in Hong Kong.
In Beijing, the Chinese government scrambled to contain the negative fall-out, signalling that it was serious about tackling the problem.
It has set up working groups in nearly every province, and embarked on a sweeping drive to set up a series of new food testing centres and replace outdated equipment, officials said.
"Our quality inspection authorities are required to establish nearly 400 product testing centres within the next two years, and 80 of these will be food testing centres," said Hou Linglin, a senior official at China's product quality watchdog.
Hou told a food safety conference in Beijing that new testing equipment was sorely needed.
"China is a large food-producing country, and the number of food items needed to be tested is growing very fast," he said.
"Although the central and local governments have increased their investment every year, currently more than 50 percent of the equipment has been used for over seven years, and is too old to be upgraded."
Meanwhile, the agriculture ministry said 29 provincial areas nationwide had set up special working groups to regulate the dairy product market, according to Xinhua news agency.
Local governments also promised subsidies for dairy farmers to reduce the cost of feeding cows, Xinhua said.
However, for all of Beijing's efforts, considerable damage has been done to the "Made in China" brand, with the milk scandal following in the wake of other scares over unsafe products from Asia's main exporting nation.
"It greatly influences people's buying decisions," Jim Cramer, an official from the Oregon state Department of Agriculture in the United States, told AFP at the food safety conference.
"It does shake the confidence of people within their own nation and obviously internationally, in the US," he added.