Britain faces the loss of £370 million in export trade in meat and live birds after the arrival of the avian flu virus in the poultry industry.

Ministers expect to receive reports today from embassies outside the European Union that countries have banned trade with the UK on poultry meat. After a similar outbreak in France last year countries outside the EU imposed immediate trade bans of at least six months.

Chicken and turkey farmers and processors are also bracing themselves for a backlash against poultry meat in Britain and are desperately trying to persuade consumers to hold their nerve and save the £3.4 billion-a-year market in Britain.

However, leading vets are concerned that the disease may now be rife in wild birds around Britain and on the Continent and the country must be prepared to live with a constant threat of a bird flu outbreak.

Public anxiety over the outbreak at the Bernard Matthews plant at Holton, in Suffolk, was further heightened when Patricia Hewitt, the Health Secretary, confirmed yesterday that the Government was preparing “very, very seriously and thoroughly for the possibility of a pandemic flu”.

A mass order for protective masks was being considered for the country, she said.

There was some relief in the Government and the industry that there appeared to be no spread of the virus to the 200-odd farms inside the 3km (1¾ mile) protection and 10km surveillance zones.

Government vets and wildlife experts are also monitoring the recent movements of wild birds in the area to find out the source of infection in a closed unit. One theory is that the virus was taken on to the farm by the droppings of a seagull. Large gatherings of gulls have been spotted at the farm in the past ten days.

Droppings can carry the virus for seven to ten days. The faeces may have contaminated shavings used for the birds’ bedding, which is stored outside, or the virus may have been picked up on the shoe of a worker. There are also wetland areas around the farm and other possible culprits include ducks, swans, geese and other waterfowl species. The concern over the threat from wild birds was signalled by Fred Landeg, the deputy Chief Veterinary Officer, when he imposed a third tier of surveillance — a restricted zone covering 800 sq miles (2,070 sq k) in East Suffolk and North East Norfolk — and ordered free-range and organic producers to lock up birds. The EU does not insist on this.

Wildlife experts are intrigued why — if the disease is now common in UK wild birds — there have been no sightings of dead birds or clusters of birds in Britain or Northern Europe. This suggests they are shedding and carrying the virus without succumbing.

The cull of 159,000 turkeys continued overnight but will be over before a statement to MPs expected today from David Miliband, Rural Affairs Secretary. Mr Miliband last night pulled out of a visit to Cumbria where he had been due to accompany the Prince of Wales on a visit to rural projects.

Government sources indicated that it may be another week before epidemiologists trace the source of the outbreak. Sales of poultry meat are worth £270 million a year and sales of breeding birds and hatching eggs £100 million. A third of the trade is in the Far East involving large quantities of poultry legs and wings.

MPs in East Anglia are anxious that tourism in the area is not affected and are urging ministers to make clear the countryside remains open for visitors and holidaymakers and for bookings to be maintained for this month’s half-term school holiday and the Easter break.

The Conservative Party is to ask the Government to draw on European Union funds to offer compensation to poultry farmers in the region who will be affected by movement bans and loss of export. It may take at least six months before lost export markets are resumed.

Another theory about the outbreak is that the virus may have been introduced by a worker who recently visited the Bernard Matthews operation in Hungary, where the disease is present. A spokeswoman for the company denied this.

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