Tests revealed that a dead swan which washed up in a harbour in a Fife fishing village last Wednesday was carrying the highly pathogenic variant of the virus which has killed at least 108 people worldwide.

The result of the tests at the European Union reference laboratory at Weybridge, Surrey, was this afternoon confirmed by the Scottish Executive. The bird was found washed up in a harbour slipway in the village of Cellardyke.

But after criticism of the fact that the bird had first been seen floating in the harbour a week ago, Scotland's chief veterinary officer, Charles Milne, announced new measures to prevent the virus spreading from the wild bird population.

Mr Milne announced a 2,500-square kilometre ((965 square-mile) "wild bird risk area" in which all poultry farmers will be required to bring their flocks indoors or take other measures to prevent them mingling with wild birds that may be infected.

There are 175 registered poultry farms - which have more than 50 birds each - and some 3.1 million birds, of which 260,000 are free range, in the area.

He also revealed that tests were being carried out on the bodies of a further 14 dead birds, 12 of them swans, but said there was no indication yet that any of them would test positive for H5N1.

Public health officials in Scotland and elsewhere in Britain were at pains to stress that the discovery of the infected swan did not mean that there was an increased risk to humans.

"The risk to public health has not changed today compared to the situation last week or last month," said Dr Harry Burns, Scotland's Chief Medical Officer. "This is an avian virus - the risk of it passing to humans is extremely low."

He was backed up by Dr Jim Robertson of the National Institute for Biological Standards and Control, who said: "There is a better chance of a person winning the national lottery than catching bird flu in the UK today."

Government advice states that poultry, properly prepared and cooked, is no danger to health. The biggest risk to the agricultural industry is a repeat of the stay-away by consumers which has crippled poultry farmers in the 13 other European countries to have detected the disease.

Tony Blair, who was meeting Bertie Ahern, the Irish Taoiseach, in Armagh said: "I do just emphasise one thing. It is very important that people understand this. This is not a human-to-human virus, it is something that is transmitted to poultry.

"It is only if humans are in direct and very intensive contact with poultry that there is any risk involved. As other countries have had to cope with this and take these preventative measures, we will do so. We will act accordingly to the best advice."

Scientists fear that H5N1 could mutate further into a form which can pass between humans, triggering a global pandemic that could kill millions.

Mass vaccination of poultry is not expected to be part of Britain’s immediate response. Professor Sir David King, the Government’s chief scientific adviser, has warned that vaccination could mask signs of the spread of the disease.

Scotland's response to the long-awaited arrival of avian flu in Britain was criticised for the eight-day delay between the discovery of the infected swan's carcass and today's announcement.

The carcass was badly decomposed and partially eaten by predators by the time it was collected on Thursday last week, some 12 hours after it was first reported. It is believed to be a native Mute swan, suggesting that it became infected by a migratory bird which brought the the disease to British shores, although Mr Milne said that it might have arrived from abroad.

Mr Milne told a press conference in Edinburgh: "The timelines could not have been tighter in my opinion. We got the results at the earliest possible opportunity and measures were put in place."

Donald Peddie, who owns a large-scale poultry farm six miles from Cellardyke, criticised the delay. He said that he only learned about the feared arrival of H5N1 on the television news last night.

Mr Peddie, who has 22,000 chickens in barns and battery sheds at Kilduncan Poultry Farm at Kingsbarns, said: "I think there are questions about how the information came out. I would have expected to be contacted a bit earlier than today. This is obviously a bit worrying. I was not expecting any discovery to be this close."

Dan Young, 45, who reported the dead swan to authorities, described finding "a mangled heap of feathers". The St Andrews University researcher, whose work includes aspects of virology, said he had been alerted by a friend, who said he thought a heron was lying in the harbour.

"I went and had a look and it was obviously not a heron. I contacted Defra and within an hour the duty vet got back to me asking where it was and saying they would pick it up," he said.

H5N1 cases have been confirmed in France and Germany, where an outbreak on a turkey farm in Saxony was announced yesterday. H5 flu strains have been reported on rare occasions in Britain, most recently in 1991 when H5N1 was identified in turkeys.

Egypt today reported its third death from bird flu, that of a 16-year-old girl, and said that an eight-year-old boy had also tested positive for the H5N1 virus.

Dr Paul Walton of the RSPB, which was the first to confirm that the Cellardyke swan had tested positive, said of the UK outbreak: "The critical thing here is to keep this in perspective. Yes, this is H5N1, but this is still a bird disease. It does not mean that there is a human flu pandemic that has suddenly landed in Britain."

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