The South American parrot believed to have died of avian flu in a quarantine facility in Essex in October did not have the disease, a government report has concluded. But Mesia finches imported from Taiwan and held with the parrot did have the deadly infection, which has killed at least 64 people in the Far East, the report says.

The death of the parrot and more than 50 mesia finches and other birds held in the same area of the quarantine facility run by Pegasus Birds created a major scare that avian flu had arrived in the UK and could potentially infect other species.

But an investigation into the outbreak by the National Emergency Epidemiology Group has concluded that the disease did not spread from the finches to the other birds held in the same area, which included four chickens.

The Department for Environment, Food and Rural Affairs (Defra), which published the report yesterday, said all the birds held in the same area of the quarantine facility had either died or been culled and there was no evidence that any had escaped or been released.

Ministers claimed the discovery that the virus had not spread to other bird species within the facility had potentially "huge implications" for international efforts to curb the spread of avian flu but opposition parties criticised the report for adding to the confusion surrounding the outbreak.

The investigation ordered by Defra found that 53 out of a consignment of 101 mesia finches died before the outbreak was discovered. However, it was not possible to establish how many had avian flu because of the practice of pooling tissue samples taken from the birds. Deaths among birds held in quarantine are common and may have a range of causes.

Five pooled samples taken from 30 of the finches were tested and the H5N1 avian flu virus was found in three, demonstrating that at least half of the Taiwanese birds were infected. Avian flu caused by H5N1 is endemic in Taiwan.

The confusion over the parrot from Surinam identified as being infected with H5N1 on 21 October arose because the sample tested was made from a pool of tissues that included a mesia finch from Taiwan.

"It has not been possible to say whether the virus isolated came from the parrot tissue or the Mesia tissue or both. However, in the light of other evidence, the balance of probabilities is that the source was the mesia sample," Defra said.

The Animal Welfare minister, Ben Bradshaw, said the discovery that the disease had been confined to the finches could extend understanding of the disease.

"At the moment we are assuming, based on evidence, that wild birds spread it over quite long distances. We don't have any proof yet however that wild birds infect poultry with the highly pathogenic strain," he said.

"Given the fact that these finches had this strain in close confinement with other birds and none of those birds got the infection, I think that will be found to be pretty significant around the world."

Oliver Letwin, the shadow Environment Secretary, said the mistaken identification of the parrot as a victim of H5N1 demonstrated failings in the system and called for quarantine procedures to be tightened.

"This is yet another worrying indication that confusion reigns. It is now clear that the original reports of what went on at Pegasus Birds were misleading. Defra says it will be another three weeks before they will announce what they will do to strengthen the quarantine system. This delay is quite unacceptable.

"The pooled testing of samples also remains a concern and has clearly led to the confusion and chaos at the centre of this discovery."

Debby Reynolds, the chief veterinary officer, said: "This report contains significant epidemiological findings and helps to further our understanding of highly pathogenic avian influenza. In particular, the apparent lack of transmission of H5N1 between species in the facility will be of interest to the international community.

The report follows a warning from a leading microbiologist that Britain should increase its H5N1 vaccine order twentyfold. Professor Hugh Pennington, president of the Society of General Microbiology, said the two to three million H5N1 vaccines ordered by the Government would not be enough in the event of a flu pandemic.