Free-range turkeys on a Suffolk farm are infected with the deadly H5N1 strain of avian flu which is potentially lethal to humans, it was disclosed today.

In a statement which will send shockwaves through the poultry industry on the eve of the Christmas turkey rush, Fred Landeg, the acting Government chief veterinary officer, confirmed the discovery of the "highly pathogenic" strain by the Veterinary Laboratories Agency (VLA) this afternoon.

"I can now confirm that the strain of avian influenza found in the infected premises is the highly pathogenic avian influenza H5N1 strain," he told journalists.

"It is of the Asian lineage. It is closely related to strains of the highly pathogenic avian influenza found this summer in the Czech Republic and in Germany."

The news will come as a severe blow to the farming industry ahead of what should have been one of the busiest periods of the year for turkey sales.

Mr Landeg said that, in addition to a 3km (1.8-mile) radius protection zone and 10km surveillance zone around the infected farm near Diss in Suffolk, which was introduced yesterday, a national general licence on bird gatherings would be revoked, meaning bird shows and pigeon racing would not be allowed.

The slaughter of thousands of poultry at the farm, which houses turkeys, ducks and geese, will be going ahead. The cull involves some 5,000 turkeys, more than 1,000 ducks and 500 geese.

All free-range birds for meat and eggs in Suffolk and part of Norfolk must be locked indoors to protect them from the fatal virus, as part of the restrictions.

In addition, hobby farmers with backyard flocks are also being visited by local animal health officers urging them to keep birds inside.

In a statement to MPs, Hillary Benn, the Environment Secretary, told the House of Commons: "I'm not going to speculate as to whether this outbreak is going to get larger. What we're doing is working our darndest to make sure that it stays where it is.

"The most important thing, having locked it down, is to trace the contacts and movements so we can take appropriate action."

The latest outbreak is the first in the UK since February when the disease was found in turkey chicks at the Bernard Matthews plant, in Holton, also in Suffolk.

The infected turkeys were being reared outdoors at Redgrave Park Farm, outside Diss, on the Suffolk-Norfolk border, for Gressingham Foods for the Christmas market.

Five male poultry workers at the farm have already been treated with Tamiflu, the anti-viral treatment to combat avian flu.

The news of the deadly strain of the virus has been taken calmly by staff, said Geoffrey Buchanan, a spokesman for the company, who with his brother, William, runs the farm. They were not personally in contact with the birds.

Since 2003, more than 300 people have become infected with the deadly virus, and more than half have died.

The Buchanans are now anxiously working with state vets to find out how the virus arrived at the premises. Wild birds are thought to be the most likely route for transmission especially as wild swans and ducks regularly gather at the farm. There is also a lake within a mile from the family farm that is another favourite gathering place for birds.

Ornithological experts are working with epidemiological veterinarians to find out the species most likely to have carried the virus to Britain and the possible flight paths from the Continent.

But experts are also checking every possible route of the virus including movements of vehicles, staff and birds to the farm and any possible link to recent cases this autumn in southern Germany.

Tests on other wild birds are also being stepped up to see if the virus is circulating in the bird population. To date, however, there has not been one positive test for avian flu on birds in the UK even though sampling increased at the end of the summer to coincide with the return migration of birds to the UK for the winter.

The most recent H5N1 avian flu outbreak this year was near Munich in September. Some 300,000 ducks were slaughtered at poultry farms after the disease was found in frozen products.

The eight-week-old bronze turkeys at Redgrave Park Farm were destined for upmarket restaurants and some go to Waitrose. The television chefs Delia Smith, Gordon Ramsay and Antony Worrall Thompson are "fans" of the birds, according to the company website.

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