Once again millions of Chinese-made toys have been pulled from shelves all over the world.
This comes after scientists found they contain a chemical that converts into a powerful "date rape" drug when ingested.
Two children in the United States and three in Australia were hospitalised after swallowing the beads.
With only seven weeks until Christmas, the season that can decide the success of the toy industry for the year, the recall is yet another blow to an industry already bruised by a slew of recalls in recent months.
They are called Bindeez in Australia, where they were named toy of the year at an industry function this year.
In the United States, the toy goes by the name Aqua Dots, a highly popular holiday toy distributed by Toronto-based Spin Master Toys.
Both are sold by Australia-based Moose Enterprises.
Moose Enterprises said Bindeez and Aqua Dots are made at the same factory, which is located in Shenzhen in China's southern Guangdong province.
The company said that the product is distributed in 40 countries but that it was up to the individual countries and distributors to determine whether the product would be pulled.
The toy beads are sold in general merchandise stores and over the Internet for use in arts and crafts projects. They can be arranged into designs and fused together when sprayed with water.
Scientists say a chemical coating on the beads, when ingested, metabolises into the so-called date rape drug gamma hydroxy butyrate.
When eaten, the compound - made from common and easily available ingredients - can induce unconsciousness, seizures, drowsiness, coma and death.
Naren Gunja from Australia's Poisons Information Centre said the drug's effect on children was "quite serious and potentially life-threatening."
The recall was announced yesterday by the US Consumer Product Safety Commission several hours after reports were published in the US about the recall in Australia.
The two US children who swallowed Aqua Dot beads went into non-responsive comas, commission spokesperson Scott Wolfson said.
In Australia, the toys were ordered off store shelves on Tuesday when officials learned that a 2-year-old boy and a 10-year-old girl were hospitalised after swallowing the beads. A 19-month-old toddler also was being treated.
Aqua Dots, which had been heavily advertised, had appeared on many toy experts' lists of must-have holiday toys.
Meanwhile, a separate recall was announced for 405 000 children's products made in China, mostly toy cars, because of dangerous levels of lead.
The recall includes about 380 000 Pull-Back Action Toy Cars, 7 500 Dragster and Funny Car toys and some Winnie-the-Pooh Spinning Tops. A Massachusetts company had already recalled 66 000 spinning tops in August.
Yesterday's recalls also include about 7 200 "Big Red" Wagons. The recalled products all had excessive levels of lead in their surface paint.
Lead is toxic if ingested by young children, but no illnesses have been reported connected to the toy car recall.
Children's products found to have more than 0,06% lead accessible to users are subject to recall in the United States.