The poultry firm Bernard Matthews could be prosecuted under food safety laws after government inspectors reported a series of biosecurity failings at a plant in Suffolk that saw the UK's first major outbreak of H5N1 bird flu.

Among problems reported today by the Department for the Environment, Food and Rural Affairs were the presence of gulls allowed to pick up waste turkey trimmings from bins outside processing plants in the compound and holes in turkey sheds through which rats, mice or small birds could enter.

Europe's largest turkey producer was forced to slaughter almost 160,000 birds at its plant in Holton after the virus, which has killed at least 166 people worldwide since it appeared in Asian poultry stocks in 2003, was identified on February 2.

Two weeks after that confirmation, Defra said today that it was relaxing its restrictions on "bird gatherings" such as fairs and pigeon races in non-affected areas around the UK and lifting a temporary ban on bird shooting in the Holton area.

It also announced that Bernard Matthews is to resume its shipments of poultry between the UK and Hungary from midnight even though Defra's own experts believe that Hungarian turkey products remain the "most plausible" clause of the outbreak. Bernard Matthews later announced that it would extend its moratorium.

The interim Defra epidemiological report concludes that there is "little evidence" to support the suggestion that the H5N1 virus could have been spread by wild birds - mainly because the virus has not been found in Europe's wild bird population since August last year.

It says the hypothesis that the virus was brought in from Hungary is supported by the final virology results showing that the virus strain found at the Bernard Matthews farm in Holton is "essentially identical" - or at least 99.96 per cent identical - to the one identified during an outbreak there last month.

According to the Defra report, the Holton plant comprises a "turkey finishing unit" - the 22 sheds where the live birds are kept - a slaughterhouse and two processing plants. The processing plants handled 4,657 tonnes of meat in the month before the outbreak, including 256 tonnes from two sources in Hungary, primarily breast meat that was simply trimmed at the plant.

The report identified a number of ways that the infection could have entered the sheds where birds were affected at the Holton plant. It said that the possibility of infection being brought into the shed via contaminated footwear and clothing could not be ruled out. Bales of wood shavings used for topping up bedding provided another potential route.

Defra said that there was an "ongoing" problem of seagulls feeding from uncovered waste bins in the processing plants and roosting on the sheds more than 500 metres away. Inspectors also found polythene bags containing residual liquid from meat products in the uncovered bins which could be blown across the site.

An inspection of the shed where the original outbreak was detected - one of four in which the virus was eventually found - "revealed that there were several points of entry for small birds and rodents (rats and mice)".

The experts also decided that the virus may have spread to the other sheds after the initial outbreak had been identified "as a result of a reduction of biosecurity measures" including the staff movements between the sheds.

The report does not discuss whether any action could be taken over the alleged failings, but a Defra spokeswoman confirmed that the firm might be prosecuted under the animal by-products regulations if the Meat Hygiene Service (MHS), a branch of the Food Standards Agency, formally reported breaches.

"We'll be examining the route that the virus took and if we could prove that there was waste left lying around then, yes, that would be grounds for prosecution," she said.

Defra also released a second report from itself and a grouping of government agencies which had looked at meat movements between the Suffolk plant and Bernard Matthews's Hungarian operation.

The report from Defra, the FSA, MHS and the Health Protection Agency found that all food importing and processing carried out at the Holton plant was in line with EU law. The agencies also said that there was no risk to human health from properly cooked turkey meat sold in Britain.

Jim Paice, Shadow Minister for Agriculture, said that the report they raised "important questions about the precautionary measures taken by the EU, especially the issue of in-country movements prior to export".

"This report must not be the end of the matter - further studies into the control of avian influenza are urgently required," he said.

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