BEIJING (AP) -- China announced a complete overhaul of its dairy industry Thursday to improve safety at every step -- from cow breeding to milk sales -- saying its worst food quality scandal in years had revealed "major problems."

Changes will be made within the next year in production, purchasing, processing and sales, the official Xinhua News Agency reported.

"The crisis has put China's dairy industry in peril and exposed major problems existing in the quality control and supervision of the industry," it quoted an official at China's top economic planning body, the National Development and Reform Commission, as saying.

Milk and milk products tainted with melamine, an industrial chemical, have been blamed in the deaths of at least three infants and have sickened more than 50,000 others. The Health Ministry said Thursday that 1,041 babies across the country were still hospitalized with kidney damage.

The government has detained dozens of people in the scandal, but there have been no court cases so far.

The State Council, China's Cabinet, said the Health Ministry will issue new quality and safety standards for dairy products, while the Agriculture Ministry will draft inspection standards for melamine and other toxins in animal feed. The flow and delivery of dairy products will also be tracked, it said in a statement.

The breadth and speed of the proposed changes echo actions taken last year, when a slew of Chinese exports -- from toothpaste to toys -- were found to contain high levels of potentially deadly chemicals.

After an initial unwillingness to acknowledge problems, authorities threw themselves into a campaign to protect export industries and bolster the country's reputation as the world's manufacturing base.

The government formed a Cabinet-level panel to oversee product quality and food safety, implemented a national food recall system, and announced increased random inspections, closures of unlicensed manufacturers and restaurants, and large-scale seizures of substandard goods.

Chinese officials also signed an agreement with the U.S. Food and Drug Administration on improving cooperation in drug safety.

Results have been mixed, largely because it is extremely difficult to regulate the country's numerous producers and suppliers, many of which are small and illegally operated.

The dairy scandal highlighted the widespread practice of adding melamine, often used in manufacturing plastics, to watered-down milk to fool protein tests. Investigations also discovered it was being added to animal feed after finding melamine-spiked eggs.

Melamine poses little danger in small amounts but larger doses can cause kidney stones and renal failure.

The government plans to tighten regulation of milk collection stations, where dairy farmers sell their raw milk, the National Development and Reform Commission said.

By the end of next year, all milk stations will be required to meet hygiene, testing, operational and personnel standards, it said.