(Adds details of pollution and clean-up campaign in paragraphs 8,9,10 and 14)

BEIJING, Aug 27 (Reuters) - Polluters along two of China's main rivers have defied a decade-old clean-up effort, leaving much of the water unfit to touch, let alone drink, and a risk to a sixth of the population, state media said on Monday.

Half the check points along the Huai River and its tributaries in central and eastern China showed pollution of "Grade 5" or worse -- the top of the dial in key toxins, meaning that the water was unfit for human contact and may not be fit even for irrigation, national legislators were told.

Years of crackdowns and waste treatment investment have reined in some of the worst damage to the Huai and Liao Rivers, but industrial pollution remained far too high, Mao Rubai, chairman of the National People's Congress environment and resources protection committee, said in a report delivered on Sunday.

The rivers posed a "threat to the water safety of one sixth of the country's 1.3 billion population", the China Daily said.

The pollution on the Huai threatened the massive South-North Water Transfer Project to draw water from the Yangtze River through the Huai basin to the country's parched north, Mao said.

"Large volumes of untreated domestic effluent and industrial waste-water are dumped directly into the river," Mao said of one of the Huai's worst polluted tributaries, according to the NPC Web site (www.npc.gov.cn).

"To judge from the inspection, the quality of water used for the South-North Water Transfer Project is threatened by pollution, and this must attract our vigilance."

In Zhoukou city in central Henan province, 15 of 23 factories inspected were found to be illegally dumping waste, Mao said.

Ma Kai, the chief of the National Development and Reform Commission, which steers industrial policy, said meeting energy and pollution reduction targets would be made a major factor in considering promotions for provincial-level officials, the China News Service reported.

China has promised to cut emissions of major pollutants by 10 percent between 2006 and 2010, but last year failed to meet the annual goal.

Mao's call for stricter standards and enforcement came as government leaders promised to lift ceilings on fines for polluters. But Mao went a step further, warning that even factories that met pollution limits were still dumping too many chemicals.

"This situation is directly related to the fact that water pollution standards for some of our country's industries are too low," he said.

Even if standards were met, the volume of toxins entering the Huai "far exceeds the capacity of the river basin to replenish itself and will inevitably create pollution", he said.

Pollutants have also tainted underwater supplies down to a depth of 300 metres in places along the Huai.

The eastern route of the transfer project is scheduled to begin pumping water in 2008, but plans to reduce pollution in Jiangsu province have not been implemented.

"The quality of the transferred water will be very difficult to ensure," said Mao.

The Liao River in China's northeast also remains beset by polluters, with large volumes of untreated waste flowing through it into the sea.

Mao said that officials along both rivers had only used some of the funds set aside for pollution treatment projects.

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