Passing by the chiller cabinets at a Sainsbury's in north London, Sandra Tribelli gave a withering look when asked if she would be buying Bernard Matthews turkey escalopes - a bargain at three for only £1.99. 'No, I will certainly not be buying any of his products - I never have and I never will,' she said. 'I am worried about the bird flu, yes, but only to some extent as I am still going to buy chicken.'

Virtually every other customer seemed little impressed by the gold seal of approval stamped on the packets, which also contain a word of assurance from the famous farmer himself: 'I hope you will enjoy my delicious range of foods, made with over 50 years of expertise and maintaining the best traditions of a family-owned Norfolk business.'

Norfolk traditions don't count for very much any more, given what has emerged about the bird flu outbreak at the Bernard Matthews plant in Suffolk. It is now known that turkey escalopes or sandwich meat can come from Brazil, or Hungary, or Poland; anywhere in the world, in fact. But as long as it is processed in Britain, it can bear a British hallmark. The scandal of how bird flu came to Britain has exposed the grubby world of the poultry trade - one that appears unhygienic and under-regulated.

Last Thursday, The Observer revealed on its website that government officials had actually known for some days that the outbreak of the H5N1 virus, which led to the gassing of 160,000 turkeys in Suffolk, might have been caused by a shipment of meat brought over from Bernard Matthews' Saga Food plant in Hungary to the company's plant in Holton, Suffolk.

For reasons that still remain unclear, no one in the government made this information public even though it had been known to officials in the Department for the Environment, Food and Rural Affairs since Monday. Neither Environment Secretary David Miliband nor agriculture ministers Ben Bradshaw and Lord Rooker mentioned it in parliamentary answers on the issue.

It was for this reason that a Whitehall source came to The Observer to reveal the link, and their unease over the secrecy. At a meeting in a Covent Garden cafe, the source revealed information about the shipment of 38 tonnes of chicken breasts that arrived at the processing plant in the days before the birds first fell sick, on 27 January. The source was deeply unhappy that none of this information had been made public by Defra.

Other suspicions caused alarm. Farm workers from Holton told the vets sent to investigate the plant that when meat came in for processing, scraps would be left around, which is not uncommon in large factories.

Some would end up in bins, from where rats and wild gulls would scavenge them. This is how the virus could have travelled, relatively swiftly, from the plant into the adjacent turkey sheds.

But both government vets and officials were profoundly aware that such information would take the trail away from the hypothesis of a wild bird flying in and spreading disease, and into the realm of the poultry food trade. The document that discussed the consignment of food from Hungary, and how it was handled, was marked 'commercial in confidence'. The protection of Britain's £3.4bn poultry industry appeared to be taking greater priority than the risk to human health.

Even more alarming, the Food Standards Agency had not been told about a possible contamination of meat for human consumption. The agency, the independent regulator of food in Britain, only found out when The Observer called on Thursday to ask what measures it was taking to investigate possible contamination of meat. 'Sorry, I don't know about this,' said an official. 'Do you have any details you can give me?'

By 6pm, Defra had started to panic. It was forced to release a statement that evening that played down the possibility of contamination of food. It admitted that, along with 'other hypotheses', it was looking at the link with Hungary.

For Miliband, it was a shocking discovery. A sharp operator who prides himself on being in control of events, the Secretary of State had not been told that this consignment of frozen chicken breasts was now at the centre of the investigation, or that the document detailing this within Defra had been marked 'commercial in confidence'.His officials had allowed him to answer questions in the Commons last Monday in which he pooh-poohed the Hungarian connection.

Last night, he was under enormous pressure to make a statement explaining when he or other ministers were told about the consignment, and whether it was not time to take action banning imports of poultry products from infected countries. As one official close to him put it: 'He's stunned by this. He feels he is really taking the rap for something that wasn't his fault. His ministers have met officials every single day since the outbreak happened, and so why wasn't it flagged up?'

By Friday morning, a meeting of the government's emergency planning committee, Cobra, was convened. It was only the second time in Cobra's history that it had met in order to discuss bird flu. Professor David King, the government's chief scientist, came out of the meeting and revealed that they now knew for certain the H5N1 virus at the Bernard Matthews farm at Holton was identical to the strain involved in the Hungarian outbreak last month, which had killed 13,000 geese at a farm in Sventes, in the south of Hungary.

He said they had to work out how the virus, a particularly virulent strain, might have moved from one plant on the Bernard Matthews farm directly into the turkey sheds. 'My worry is that it might have got into the wild bird population, so the concern is that we have gone from poultry to wild bird, and we need to keep a very close eye on that,' he said. If wild birds had been infected, the deadly virus 'might spread quickly', he warned.

So far, there is no sign that it has got into the wild bird population, but checks were being carried out on geese and swans around Britain this weekend to see if there were signs of infection. Mark Avery of the Royal Society for the Protection of Birds said: 'We now know that wild birds are victims, not the villains. But we are still really worried about possible spread. If a gull picked it up, say, they can fly 10 kilometres in a day.'

Bernard Matthews - facing mounting questions - announced on Friday that it was voluntarily suspending any further imports of meat from Hungary. The company is still denying there was any possibility its plant in Sarvar could have been infected, but it is still not saying much about the scale of its operations.

The company is now reeling from the revelation that a third plant was involved in the chain, which it had not publicly revealed. The suspected consignment of raw meat did not go directly from the large plant in Sarvar to the UK; the birds concerned appear to have been taken for killing to an abattoir in Kecskemet, just 20km from the area of infection where geese died of H5N1 last month. It now transpires that some 290 tonnes of turkey breast has gone from Kecskemet into Britain in the past year.

For Hungary, the situation is a nightmare. The country has millions of head of poultry, and relies on its export trade for many thousands of jobs. Yesterday, its deputy chief vet, Dr Bognar Lajos, said it was not yet proved that the turkey plant in his country was the source of Britain's bird flu outbreak.

'Of course, it can be the same [virus], but I can say that the virus is circulating in the [wild] birds - you can find this virus in other places also,' he told the BBC. But he added: 'It is confirmed that there is a trade between this slaughterhouse [at Kecskemet] and Bernard Matthews.' British vets will travel to Hungary this week to conduct a full examination at Sarvar, including the farms, the slaughterhouse and the freezers.

Meanwhile food experts said the government needed to tell the public how to handle raw meat in a hygienic way to prevent any remote possibility of contaminated food affecting human health. Professor John Oxford, the country's leading bird flu expert, pointed out last night that raw meat does carry a slight risk if not properly handled. He told The Observer: 'The processing destroys an awful lot of this virus, which is very sensitive to temperature changes. But there is the possibility that tiny amounts of the virus would still exist in it. That is why it is essential the health authorities tell people that they need to wash their hands properly after handing the raw chicken or turkey. Simple handwashing will destroy the virus.'

For the supermarkets, there was a nervous wait this weekend to see if the agency's investigation will lead to a product recall. Tesco has noted a small fall in sales of poultry and Bernard Matthews products since the outbreak, but sales at Asda are totally unaffected. Bernard Matthews has insisted that its food is completely safe and there is no risk of catching flu, but researchers say the food brand has already been badly damaged by the outbreak.

YouGov's BrandIndex, which monitors consumer attitudes to 1,100 brands every day, revealed last night that the company is now the second worst liked brand in Britain, behind only McDonald's. Sundip Chahal from the research agency said: 'It has plummeted in the last three days. It seemed like it might bottom out, but with the further events this weekend I wouldn't be surprised if it fell further.'

Consumers appear to be taking matters into their own hands, by boycotting the products. As one woman, Tracy Evans, put it as she perused Sainsbury's shelves: 'I would still buy turkey but I would make sure that it was fresh. If I don't buy these Bernard Matthews products and other people don't buy it, hopefully they'll have to upgrade the food to a better standard. Some poor people have to, but they're fools to buy cheap processed foods like Turkey Twizzlers because it's rubbish, basically.'

And with that, she went off to buy a free-range chicken.