A cargo ship spilled acid into China's longest river last week, contaminating tap supplies and sparking a run on bottled water in eastern China, the government and state media said.

It is the nation's second water pollution scare in a month, after factories in the southern region of Guangxi contaminated water supplies for millions with toxic cadmium and other waste in January.

The ship, reportedly South Korean, was docked in Zhenjiang city on the Yangtze river last Thursday when it leaked phenol -- an acid used in detergents -- into the water because of a faulty valve, local authorities reported.

Residents started complaining their tap water had a strange smell on Friday, and soon rumours that a capsized ship was polluting the river sparked a run on bottled water in at least two cities in Jiangsu province, the Shanghai Daily said.

One photo carried by the official China Daily newspaper showed a supermarket shelf stripped nearly bare as a customer loaded water bottles into a shopping cart.

The water quality had now returned to normal, the government of Zhenjiang, in Jiangsu, said in a statement late Tuesday.

A resident in the city of three million told AFP the run on water appeared to have eased on Wednesday.

"There was panic buying of bottled water for a couple of days. But it stopped after we received a government notice clarifying that the tap water is safe now," the resident, who declined to be named, told AFP.

Zhenjiang officials would not comment when contacted by AFP on Wednesday. The South Korean Consulate in Shanghai, meanwhile, said it was not aware of the incident.

Phenol -- also called carbolic acid -- can irritate the eyes and skin, damage the liver and kidneys, and impair the nervous system if absorbed, according to the US Occupational Safety and Health Administration.

The incident comes hot on the heels of the more serious environmental scandal in Guangxi, where a 300-kilometre (190-mile) section of the Longjiang River was polluted by toxic cadmium and other waste.

Authorities have detained at least eight company executives and punished nine government officials over the case.

Many waterways in China have become heavily contaminated with toxic waste from factories and farms -- pollution blamed on more than three decades of rapid economic growth and lax enforcement of environmental protection laws.