The infants, all aged below 11 months, shared symptoms including vomiting and were being treated in the same hospital in northwest China's Gansu province, Xinhua news agency reported.
''It was rare for babies to get kidney stones, let alone so many babies at the same time,'' the report quoted Zhang Wei, a doctor involved with the treatment, as saying.
The babies were all from remote farming regions and had all been fed the same brand of cheap milk powder, identified as the ''Sanlu'' brand, manufactured by a leading Chinese dairy products company, the report said.
The Sanlu Group has maintained that the product in question was produced by market pirates illegally using the group's brand name and has dispatched teams to independently investigate the Gansu incident, Xinhua said.
The provincial health bureau was also investigating the milk powder and any links to the Sanlu Group, it said.
Zhang said other babies could have also been sickened, but parents may have refrained from seeking help due to the high cost of medical treatment.
It is not the first time alleged substandard milk powders have been linked to health risks in China.
In 2004, 13 infants in eastern China's Anhui province died of nutritional deficiencies after being fed substandard milk powder, the report said.
In that case over 170 other babies, most raised in rural areas of Anhui, suffered from malnutrition and other symptoms including swollen heads and an inability to grow after being fed deficient milk powders, it said.
Authorities have been seeking to improve the reputation of China's food and drug industries after scandals surrounding exports of a range of goods, from toxic seafood to fake medicine, made domestic and international headlines.
Last year, the former head of the State Food and Drug Administration, Zheng Xiaoyu, was executed after being convicted of taking bribes in return for approving hundreds of drug products, some of which later proved dangerous.