An unpublished report from the Meat and Livestock Commission reveals that all stages of food handling, from the abattoir to the plate, are now suspect.
The Independent on Sunday has also learned that the European Commission warned the Government to clean up Britain's slaughterhouses eight years ago - but nothing was done. In addition, evidence has emerged of beef offal banned under anti-BSE regulations turning up in butchers' shops in Birmingham.
The revelations are sure to provoke a storm at Westminster this week. Fresh demands for Agriculture Minister Douglas Hogg to resign are inevitable.
In January, following an outbreak of E. coli that claimed 20 lives, Michael Forsyth, Secretary of State for Scotland, asked the Meat and Livestock Commission to investigate whether a tough new licensing system was needed for butchers.
The MLC's findings in Scotland, which have been delivered to the Government, support the worst fears of experts who believe the handling of meat outside abattoirs allows ample opportunity for contamination with the deadly organism. All stages are identified as needing higher standards, and the dossier highlights the frequency with which cooked and raw foods are kept in close proximity.
Nigel Griffiths, Labour's consumer affairs spokesman, said: "Michael Forsyth has ordered this report ... and he must publish it now. Consumer confidence is already at a low. Secrecy can hardly help to restore it."
Mr Forsyth is in a quandary, however. It is less than two weeks since ministers were embroiled in a furious row over the leaking of a draft report into poor conditions in slaughterhouses. Publishing the MLC report will re-ignite the argument; failing to release it will lead to accusations of a cover-up.
The European Commission told ministers to clean up Britain's abattoirs in 1989, documents obtained by the Independent on Sunday reveal. Inspectors from the Commission cited the dangers of contamination from slaughtering dirty animals, the issue at the heart of the E. coli row.
The then Agriculture Minister, John Gummer, admitted to his Labour counterpart, Dr David Clark, that the ministry and EC inspectors had identified dirty cattle and sheep as a point "to which plants need to give particular attention". He promised action, but last year another EC inspection still found "serious weaknesses" in slaughterhouses, including meat being contaminated by excrement.
Dr Clark said last night: "I visited over 20 abattoirs as shadow agriculture minister and was appalled at what I found. But when I raised this with the ministry, its view was that I was making a fuss about nothing."
Labour will tomorrow table parliamentary questions over allegations of a cover-up of banned meat being supplied to butchers in Birmingham.
The Meat Hygiene Service, the government agency responsible for ensuring that beef in the shops is BSE-free, is accused of failing to enforce regulations aimed at ensuring that the brains and spinal cords of cattle do not enter the food chain.
Documents obtained by The People show that environmental health inspectors who visited 120 butchers in Birmingham found items of banned specified bovine offal in five shops. The Meat Hygiene Service admits it did not analyse the samples but simply destroyed them.
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