Dairy giant Fonterra's milk products, which had been recalled in some countries over contamination fears, did not contain botulism-causing bacteria.

New Zealand's Ministry for Primary Industry (MPI) said its test results on Fonterra's milk products do not indicate any sign of a bacteria that can trigger botulism, a potentially fatal infection that attacks the nervous system.

Fonterra, the largest dairy firm in New Zealand, triggered panic across its global portfolio after it reported having found traces of the bacteria Clostridium botulinum in some of its products at the beginning of August.

The ministry, however, said that the test result found a presence of a different type of harmless bacteria called Clostridium sporogenes, which does not cause botulism.

"There are no known food safety issues associated with Clostridium sporogenes, although at elevated levels certain strains may be associated with food spoilage," said the ministry.

Scott Gallacher, acting director general of the MPI, said when he received Fonterra's warnings he "immediately adopted a precautionary approach to protect consumers both here and overseas".

"We needed to act on what we knew at that time. The information we had then said there was a food safety risk to consumers and we moved quickly to address it," he said.

Fonterra, the largest exporter of milk products in the world, is the biggest contributor to New Zealand's dairy export earnings. The dairy industry accounts for 25% of New Zealand's total merchandise export earnings.

Fonterra's milk products are being put through extra testing in China, Sri Lanka and Bangladesh. China is one of the most important customers of the company.

Earlier in August, China's quality watchdog asked the country's importers to recall milk products supplied by the New Zealand-based Fonterra Co-operative Group after the initial fears that botulism bacteria had been discovered.

"It's good news it's all clear for us regarding this recall," said Theo Spierings, chief executive of Fonterra