More than two million people in Wuxi city in the eastern province of Jiangsu were left without tap water to drink or wash in last week due to an algae bloom choking Taihu lake, once renowned for its scenic beauty.

"We are strengthening our supervision and inspecting every enterprise that is discharging nitrogen and phosphorus," vice environment minister Zhang Lijun told journalists.

"Those that are exceeding limits will be shut down and those that are within the standards will be further restricted to what Taihu lake is capable of withstanding."

All enterprises in the Taihu area that discharge phosphorous and nitrogen -- chemicals widely used in fertilisers and soap powders and the leading causes of the algae bloom -- would also have to re-register for discharge permits, he added.

The filthy water became apparent last month, when low levels in the lake and an accumulation of industrial waste and untreated raw sewage sparked the putrid algae growth.

Zhang said efforts were also being made to divert water from the nearby Yangtze river into the lake to dilute the pollution, while boats have already removed up to 6,000 tons of the algae from the lake.

According to Wuxi vice mayor Liu Hongzhi, 502 factories in the area will need to be relicensed to discharge waste, while monitoring will be stepped up on 22 key polluting industries, Xinhua news agency said.

In Changzhou city, which has two rivers leading into Taihu lake, 82 printing and dyeing, pharmaceutical, and chemical plants have also been ordered to halt the discharge of waste, it said.