Experts are currently investigating a total of four cases at Kirklands Day Nursery, in Barnard Castle, as two other children are being cared for at home.
A spokeswoman for Public Health England also confirmed a fifth child with recent symptoms is awaiting test results. The children fell ill at about the same time between April 25 and April 27.
The nursery, in Bede Road, has been closed while the organisation, along with Durham County Council, investigates the cause of the infection.
The spokeswoman said: “Experts from Public Health England and Durham County Council can confirm they are investigating four cases of E. coli O157 infection in children who attend Kirklands Day Nursery in Barnard Castle.
“Two of the affected children are currently in hospital and the other two are being looked after at home.
“There is also a fifth child with recent symptoms who is awaiting test results.”