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The toy has proved extremely popular in both countries. In 2007, Bindeez was named Australia's Toy of the Year.

The toy consists of hundreds of brightly-coloured beads that can be arranged into a piece of art and sprayed with water to set.

The beads are meant to be coated in a non-toxic glue, but a batch in Australia was found to be covered with a substance that did not match the approved formula.

In Australia, two children in New South Wales and one child in Queensland have been hospitalised in the past two weeks after swallowing the beads.

All three have now recovered, but all of the country's states and territories have now banned the toy.

In the US, two children were affected, the Consumer Product Safety Commission warned. They slipped into comas, but later recovered.

About 4.2 million units of the toy will be recalled in the US, officials said, and about one million in Australia.

Australian-based manufacturer Moose Enterprises said the toys were made at a factory in southern China's Guangdong province.

The firm said Bindeez beads would in future be covered with a "foul-tasting ingredient" to try to ensure children would not eat them.

The fair trading minister in Australia's New South Wales, Linda Burney, said an investigation was under way to determine how batches of the Chinese-made beads failed to match the approved formula.