By Ann Moore

CHARLESTON, W. Va., Jan 10 (Reuters) - Up to 300,000 West Virginia residents were told not to drink tap water on Friday after a chemical spill called its safety into question, and health officials said water in the affected area should only be used for flushing toilets and fighting fires.

"We don't know that the water's not safe, but I can't say it is safe," Jeff McIntyre, president of West Virginia American Water Co, told a televised news conference. The company runs the state's largest water treatment plant.

Governor Earl Ray Tomblin declared a state of emergency for nine counties, and President Barack Obama issued an emergency declaration on Friday. The spill forced the closure of schools and businesses in the state capital.

"If you are low on bottled water, do not panic. Help is on the way," Tomblin said in a statement. "We are taking every measure to provide water to you." He said supplies were moving into the area.

Tests were being done on the water, McIntyre said, but he could not say when it would be declared safe for normal use.

The spill of 4-Methylcyclohexane Methanol, or Crude MCHM, a chemical used in the coal industry, occurred on Thursday on the Elk River in Charleston, West Virginia's capital and largest city, upriver from the plant run by West Virginia American Water.

Water carrying this chemical has an odor like licorice or anise, McIntyre said. While the chemical is not highly lethal, the level that could be considered safe has yet to be quantified, he said.

A water company spokeswoman said the chemical could be harmful if swallowed and could cause skin and eye irritation.

The spill originated at Freedom Industries, a Charleston company that produces specialty chemicals for the mining, steel and cement industries.

UP TO 5,000 GALLONS LEAKED

The governor said in an interview with CNN that there were several thousand gallons of the chemical at the plant, and it is estimated that at the maximum about 5,000 gallons leaked out.

"The old tank has been emptied and taken away and as of right now the company is closed down," Tomblin said.

Tomblin said that when the Department of Environmental Protection went to visit the company on Thursday morning, "they had to convince them they needed to get in to take care of this problem."

Freedom Industries President Gary Southern said in a statement that the company was still determining how much Crude MCHM had been released.

"Our team has been working around the clock since the discovery to contain the leak to prevent further contamination," he said.

Emergency workers and American Water distributed water to centers around the affected area. Residents formed long lines at stores and quickly depleted inventories of bottled water.