The local vice mayor and several officials have been sacked over the contamination of Yunnan province's Yangzonghai lake, the China News Service said.

At least 18 officials have been removed from their posts or relieved of their duties pending investigation, including provincial, city and county-level Communist Party cadres, it said. Eight were reportedly demoted.

Xinhua news agency said it would take about three years and cost several billion yuan (hundreds of millions of dollars) to clean up the lake, were high levels of poisonous arsenic were found in June.

At least 26,000 people living around the lake had their water cut off in July because of the problem, it said.

Most of the residents were soon given access to water from another source, but about 200 were still dependent on bottled water, Xinhua reported.

Three executives of the Jinye Industry and Trade Co, a chemical firm suspected of being the principal polluter, have also been arrested and are facing criminal charges, the report said.

The local government's blind pursuit of economic growth and tax revenues led to the lax pollution controls around the lake, despite orders from Beijing to place greater priority on the environment, according to Xinhua.

Last year, the chemical company paid 11m yuan ($1.6m) in taxes, it said.

Locals had complained about the pollution from the factory for years, but officials refused to take action, China News Service said.

Yangzonghai Lake is noted for its underwater springs and is one of several scenic areas in Yunnan province, which is known for its spectacular environment and biodiversity.

The lake is a popular resort destination for people living in the nearby provincial capital of Kunming, which itself borders Dianchi Lake, one of China's biggest freshwater lakes but also one of its most polluted.

Nearly 30 years of unbridled economic growth have left most of China's lakes and rivers heavily polluted while the nation's urban dwellers also face some of the world's worst air pollution.