BEIJING (Reuters) - The first lawsuit seeking compensation for pollution of China's second longest river has been successful, a state newspaper said on Wednesday, as Beijing faces a growing water crisis.

Three companies in the northern region of Inner Mongolia agreed to pay a total of 2.3 million yuan ($285,100) for polluting more than 400 km (240 miles) of the river in 2004, the China Youth Daily said.

But that was less than the 2.89 million yuan the plaintiff, a water company in the Inner Mongolian city of Baotou, was originally granted in compensation, the newspaper added.

After an appeal, the three companies and the water firm agreed via arbitration to the lower figure, the report said.

The river, which supplies water to 12 percent of China's 1.3 billion people and 15 percent of its farmland, has been badly tainted by sewage, industrial waste, fertilizer and other pollutants.

The Yellow River, which gets its name for the yellow-brown silt it carries, has long been known as "China's sorrow" because of its legacy of suddenly shifting course and flooding, killing countless people over the ages.

A million people are believed to have died when the river flooded in 1887 in the world's deadliest natural disaster on record.

China is facing a severe water crisis -- 300 million people do not have access to drinkable water -- and the government has been spending heavily to clean major waterways like the Yellow, Huaihe and Yangtze rivers.

But those clean-up campaigns have made limited progress because of spotty regional enforcement and uncooperative industry.

Last year, an explosion at a chemical plant in northeastern China poisoned drinking water for millions and sent a toxic slick heading toward Russia.

China's top environmental minister resigned after the November 13 Jilin accident and a vice mayor in charge of evacuating the city where the explosion occurred was said to have hanged himself.