Three children have been hospitalised after falling unconscious when they ingested the tiny beads on the toy, Bindeez.
All the children have recovered, but every Australian state banned the toy and customs officials in Hong Kong said they would investigate it.
Recalling toys
The company behind the product, Moose Enterprise, immediately issued
a voluntary recall, saying children's health was of paramount
importance. It is also cooperating with officials, it said.
In a statement it added that its products were manufactured by internationally-approved toy manufacturers in China and subject to world-standard independent testing.
Bindeez has hundreds of 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 were found to contain the hallucinogen GHB, also known as fantasy.
The product, named Australia's Toy of the Year, is hugely popular here and officials are now concerned about the feasibility of recalling every single bead.
Causes 'fantasy experience'
"Media reports that swallowing the bead can lead to a fantasy
experience will tempt young people who are wanting to experiment with
drugs to deliberately ingest the beads," New South Wales opposition
spokeswoman on fair trading Catherine Cusack said.
"It is vital a collection system be put in place immediately to enable police to recover as many Bindeez beads as quickly as possible." Hong Kong Customs officers were meanwhile sending samples of the toys to a government laboratory for testing.
If found guilty of an offence, the manufacturer could face a fine of 100 000 Hong Kong dollars (R85 000) or a year in jail.
Shortly before the recall, Moose Enterprise was named a finalist for an Australian Export Award, which will be announced later this month. - (Sapa-AFP)
Read more:
What is GHB (Gamma hydroxybutyrate)?