Toy manufacturers could face multi-million dollar lawsuits if their products contain too much lead after the US state of California this week accused leading manufacturers and retailers of knowingly selling toys that breached hazardous substances regulations.

The state said it would sue 20 companies including Barbie-maker Mattel and retailers such as Wal-Mart, Kmart and Toys "R" Us that were selling toys containing illegal quantities of lead.

This could open the floodgates for similar claims across other states and countries - a move that would prove highly detrimental to the $50bn a year toy industry.

Several popular toys including Barbie doll accessories, as well as children's lunch boxes, cars and trains have already been recalled this year because they contained high levels of toxic materials that could be harmful to humans.

California's Attorney General Jerry Brown said the lawsuits, filed in Alameda County Superior Court, aimed to increase consumer protection: "Companies must take every reasonable step to assure that the products they handle are safe for children and their families and fully comply with the laws of California."

The suit alleges the companies knowingly exposed children to toxic levels of lead and failed to provide adequate health warnings. Each company found guilty could face fines of $2,500 per violation.

The crack-down was welcomed by the Oakland-based Centre for Environmental Health (CEH), which has been lobbying for tighter controls over the toy market.

CEH executive director Michael Green said: "Attorney General Brown's decision to take on the toy companies is an important step toward cleaning up this industry."

The move will also serve as a warning shot to other manufacturing industries using potentially toxic components that they face serious legal risks if they breach environmental and safety best practices.