Food retailers have been told to carry out urgent tests on all beef products after the meat in some Findus lasagnes was found to be up to 100% horsemeat.
The Food Standards Agency (FSA), which ordered the UK tests, said it was "highly likely" criminal activity was to blame for the contamination.
It said there was no evidence of a health risk, but its chief executive said it was an "appalling situation".
Findus has apologised to customers and withdrawn the meals from sale.
Findus is the latest company to be caught up in the controversy surrounding contamination of meat products, which has affected companies in the UK, Irish Republic, Poland and France.
Findus's affected products were made by a third party French supplier, which had alerted the company to concerns that the beef lasagne product did not "conform to specification".
Criminal trade'
Catherine Brown, the FSA's chief executive, told the BBC: "I have to say that that the two cases of gross contamination that we see here indicates that it is highly likely there has been criminal and fraudulent activity involved.
"We are demanding that food businesses conduct authenticity tests on all beef products, such as beef burgers, meatballs and lasagne, and provide the results to the FSA. The tests will be for the presence of significant levels of horsemeat."
The FSA has ordered Findus to test the contaminated lasagne for the veterinary drug phenylbutazone, or "bute".
"Animals treated with phenylbutazone are not allowed to enter the food chain as [the drug] may pose a risk to human health," it said.
Findus had withdrawn its beef lasagne in 320g, 360g and 500g sizes as a precaution on Monday.
The FSA said Findus had tested 18 of its beef lasagne products and found 11 meals containing between 60% and 100% horsemeat.
It advised people who had bought any Findus beef lasagne products not to eat them and to return them to the shop from which they were purchased.
Environment Secretary Owen Paterson said the findings were "completely unacceptable" and the presence of unauthorised ingredients "cannot be tolerated".
Mr Paterson said the government was working closely with businesses to "root out any illegal activity" and enforce regulations.
"Consumers can be confident that we will take whatever action we consider necessary if we discover evidence of criminality or negligence," he said.
Shadow environment secretary Mary Creagh said the latest revelations raised questions about the extent of the scandal.
"This is no longer just a food safety issue but possibly a criminal trade," she said.
Findus confirmed the product was manufactured by a third party supplier and said all its other products had been tested and were not affected.
Supplier concerns
The company said: "We understand this is a very sensitive subject for consumers and we would like to reassure you we have reacted immediately. We do not believe this to be a food safety issue.
"We are confident that we have fully resolved this supply chain issue. We would like to take this opportunity to apologise to our customers for any inconvenience caused."
Earlier this week, French food supplier Comigel had alerted Findus and Aldi and advised them to remove Findus Beef Lasagne and Aldi's Today's Special Frozen Beef Lasagne and Today's Special Frozen Spaghetti Bolognese.
Tesco also decided to withdraw Everyday Value Spaghetti Bolognese.
The Tesco product was produced at the same Comigel site but there was no evidence of contamination, the supermarket said.
The wider food contamination controversy arose in mid-January when Irish food inspectors announced they had found horsemeat in some burgers stocked by a number of UK supermarket chains, including Tesco, Iceland and Lidl.
Asda has withdrawn products supplied by Newry-based Freeza Meats, which was storing meat found to contain a high proportion of horse DNA. Two samples were found to contain 80% horsemeat.
The horsemeat controversy has hit the Irish meat-processing industry, with a number of suppliers on both sides of the border affected.
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