Authorities in New Delhi declared a public health emergency and closed schools and all construction activity until next week as air pollution in the Indian capital hit its worst level this year.
A thick haze has hung over the Indian capital this week caused by plumes of toxic smoke from farm fires raging in neighbouring states.
An index measuring the level of a deadly air pollutant hit 484 on a scale of 500 on Friday, the government's Central Pollution Control Board, the worst this year.
The index measures the level of PM 2.5, tiny particulate matter that goes deep into the lungs. Anything above 400 poses a risk for people with respiratory illnesses and can also affect even those with healthy lungs.
Some companies advised employees to avoid exposure to toxic air and work from home.
"We have been advised to stay at home on Monday," said Anuj Rawat, an account director at Kantar, the market research arm of British advertising major WPP. Kantar employs about 400 people at its office in New Delhi, Mr Rawat said.
The Environment Pollution Control Authority, which is leading the effort to tackle Delhi's pollution, said: "We have to take this as a public health emergency as air pollution is now hazardous and will have adverse health impacts on all, but particularly our children."
It banned all construction work in the sprawling metropolis of 20 million people and its neighbouring cities until November 5.
Each year, farmers in the states of Punjab and Haryana burn crop residue to prepare for the sowing season, ignoring government warnings.
According to government-run monitor SAFAR, satellite pictures had captured nearly 3,200 incidents of stubble burning on Thursday in Haryana and Punjab that contributed to 44 per cent of Delhi's pollution.
Delhi Chief Minister Arvind Kejriwal offered free masks on Friday and ordered schools shut till November 5 to protect children.
The toxic air has left several Bangladeshi cricket players with sore throats and itchy eyes ahead of their Twenty20 match against India on Sunday.
"Government knew an emergency situation was approaching and did not take substantive steps on stubble burning or big industrial polluting sources," said Sunil Dahiya, an energy and air pollution analyst at Greenpeace.
"A public health emergency situation began at least 10 days ago."
Germany's Chancellor Angela Merkel urged greater efforts to clean up New Delhi's toxic air as she pledged one billion euros to help Indian cities switch to green transport.
Ms Merkel became a rare foreign leader to speak out on India's smog crisis after being exposed to the capital's air on Friday.
The same day, Ms Merkel went on a ceremonial parade in the city with Prime Minister Narendra Modi as the smog intensified.
Neither leader wore masks despite authorities telling residents to stay indoors to avoid the haze.
Ms Merkel said that Germany would spend 1 billion euros on "green" urban transport projects in India over the next five years, including 200 million euros to replace diesel buses in Tamil Nadu state.
"These diesel buses are to be replaced by electric buses and anyone who saw the pollution in Delhi yesterday would find very good arguments for replacing even more of these buses," Ms Merkel said in the widely reported speech.
The city will be under a new spotlight on Sunday when India play Bangladesh in a cricket international.
The two teams have insisted they will go ahead with the match despite the pollution threat.
Some Bangladesh players and bowling coach Daniel Vettori trained in masks at the Arun Jaitley stadium, where the Twenty20 match is to be played.
Authorities have ordered trees in and around the stadium to be sprayed with water to collect dust.
They have also set up special patrols to stop construction work and garbage burning.
Bangladesh captain Mahmudullah Riyad said the team had spoken about the pollution dangers but there was little they could do.
"When we came here there was smog, we all know, but the players have practised for last three days, trying to adapt to the conditions," he said.
"It's not within our control, we have to focus on our cricket."
Fourteen Indian cities including the capital are among the world's top 15 most polluted cities, according to the United Nations.
According to one study, smog kills a million Indians prematurely every year.