Medsafe, a health ministry business unit, said consumers should immediately stop taking Miracle Mineral Solution, or MMS, which could cause 'severe harm to health', reported The New Zealand Herald.
The solution's distributors claim that people have seen it work and the warnings show that medicine is biased towards the pharmaceutical industry.
Medsafe warned the chemical, based on chlorine dioxide, was used for stripping textiles and industrial water treatment. It is also a recognised water purifier used as a substitute for chlorine in public water supplies.
Medsafe said high oral doses could cause nausea, vomiting, diarrhoea and symptoms of severe dehydration.
But Waikato distributor Roger Blake said he had sold hundreds of bottles for three years and had received no complaints of acute problems.
There were probably more than 100 distributors in New Zealand, with sales picking up about 30% every year. They had sold between 500 and 1,000 bottles a year during the past three years, Blake said.
Medsafe said it had followed an international precedent, including the United States Food and Drug Administration's lead, in issuing the warning.
The product is categorised as a dietary supplement and does not require health ministry approval to be sold.