Three million Mars and Snickers bars recalled following an extortion bid are being crushed and buried in the south Sydney suburb of Lucas Heights, reports the Australian Associated Press.

The bars were removed from sale in New South Wales last Friday after the company received three letters claiming seven bars had been contaminated in the Sydney area.

A fourth letter, again threatening "a third party organisation in Sydney", was received on Wednesday at the company's Victorian head office.

The latest letter came on the same day tests confirmed a Snickers bar sent to MasterFood's headquarters last month was contaminated with a pesticide-like substance that could be harmful to children.

MasterFoods regional president Andy Weston-Webb said the exhaustive recall process had led to products being removed from more than 40,000 outlets.

"Today we began to destroy more than three million Snickers bars so we can destroy the threat they represent to the community," Weston-Webb said.

"It will be carrying on through the next week and this will be the final phase and provide some closure for us," he said. "We've discussed this destruction process with the NSW Health Authority, they believe deep burial represents the most secure, most environmentally sound and most efficient way of disposing of this quantity of product."

Weston-Webb said the complex recall had been completed without any serious health concerns. "Nobody has been hospitalised, several people have visited hospital but none have been admitted and the symptoms have been as broad as people having a headache, flu like symptoms, several people have been nauseous," he said.

"In every case we've taken it seriously but there is no established pattern and I'm happy to say that no one has reported to have eaten a Mars or Snickers bar since Tuesday," he said.

It is not yet known when the chocolate bars will be returned to store shelves, with MasterFoods saying it will consult the NSW Police and health authorities before making a decision.