According to the China Daily, the 22 companies blamed in the scandal will make a one-time 900 million yuan ($131 million) cash payment to victims.
The remaining 200 million yuan ($29 million) would cover bills for lingering health problems, the paper said, citing an unnamed source from the China Insurance Regulatory Commission.
Details in the report roughly correspond to figures provided this month by lawyers seeking to sue the companies involved, who said that most children who suffered kidney stones would get 2,000 yuan ($290), while sicker children would be paid 30,000 yuan ($4,380).
Families of children who died will each get 200,000 yuan ($29,000), China Daily said.
At least six babies died and 294,000 other children suffered kidney and urinary problems from drinking the baby formula made from the contaminated milk.
The compensation plan - which was originally announced Saturday - and the trials of those blamed for the contamination appear to signal that authorities hope to end what was widely seen as a national disgrace highlighting widespread problems with food safety and corporate and governmental malfeasance.
At least four of the suspects on trial could be given the death penalty, according to the official Xinhua News Agency. The status of the trials were not known, and Xinhua said verdicts would be announced on an unspecified "selected date."
The four face charges of endangering public safety for allegedly producing 200 tons of a mixture of melamine and malt dextrin, a food additive made from starch, that they marketed to milk producers, according to state media reports.
Between November 2007 and August 2008, they sold 110 tons to milk producers - including Sanlu Group Co., the dairy at the heart of the scandal - for a total of 1.23 million yuan ($180,000), the reports said.
Xinhua said the other five on trial are charged with producing and selling toxic food, but did not give other details.
The discovery of melamine in dairy exports such as chocolate and yogurt triggered a slew of product recalls overseas.
The first trials in the case began on Friday for six men, also charged with making and selling melamine.
Hearings were held Monday in the northern city of Shijiazhuang, where Sanlu is headquartered, along with three other cities in surrounding Hebei province, according to Xinhua and state broadcaster CCTV.
Sanlu's chairwoman and general manager, Tian Wenhua, is scheduled to go before a Shijiazhuang court Wednesday.
Associated Press researchers Yu Bing and Zhao Liang contributed to this report.
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