A major London department store is giving consumers the chance to buy unpasteurised milk, despite the government food watchdog's claim that the move is illegal on public health grounds.

The milk, known as raw milk, is banned from mainstream sale in England, Scotland and Wales. Its distribution is so tightly regulated that supermarkets and mainstream retailers are not allowed to stock it, although it can be sold directly by producers.

But the growing number of raw milk devotees are now able to buy it fresh from a vending machine in Selfridges food hall in London's west end.

The Food Standards Agency (FSA) said the move was in contravention of food hygiene regulations designed to protect consumer health, and released a statement saying "discussions are still ongoing".

Raw milk dispensers are hugely popular on the continent, allowing customers to top up their own glass bottles. But the FSA says it may contain bacteria "such as salmonella and E coli that can cause illness".

It said it had informed Westminster City Council, which deals with the day-to-day enforcement of food safety and public health protection in its area, of the position and that it believed this had been passed on to Selfridges.

Selfridges said Westminster City Council knew it was selling the milk and claimed it had regulatory approval because the sales will be handled by a concession run by Longleys Farm, an established dairy farm.

The bottles carry a health warning demanded by the FSA which reads: "This organically produced raw milk has not been heat treated and may therefore contain organisms harmful to health".

Steve Hook of Longleys Farm, based in Hailsham, East Sussex, said he had been selling raw milk since 2007. "We pay fantastic attention to hygiene to ensure the strict bacteria tests conducted on the milk by the FSA are easily met," he said.

"Our milk is regularly analysed, and our milking plant regularly inspected, to ensure that the cleanest milk is produced. In this way all the benefits of the good bacteria in the milk are kept, without having any of the problems associated with bad."

But the FSA insisted the vending machine was not acceptable. In a statement it said: "In England and Wales, the rules for selling raw cows' milk for human consumption state that it can only be sold directly to the final consumer from the farm where it is produced, or at a farmers' market, which is regarded as an extension of the farm. The farmer can also sell to a distributor to sell to the final consumer from a vehicle which is lawfully used as a shop premises (for example, via a milkround)."

If said that if Selfridges does not stop selling the milk, the Animal Health and Veterinary Laboratories Agency may take enforcement action.

Both Hook and Selfridges said they were not aware that they were doing anything wrong, and would keep selling the milk until they were officially ordered not to.

Hook said he had sold about 20 litres of the organic milk from the machine, adding: "Over the last five years I have sold hundreds of thousands of pints of raw milk and there has never been any illness."

In the summer, FSA chief executive Tim Smith said the agency was now having to look at new sales outlets which did not exist when the 2006 regulations were drawn up: "We will also consider the impact of developments in the unpasteurised milk market, for example internet sales and vending machines which were not envisaged when the food hygiene regulations were introduced."

At Selfridges there was a steady trickle of curious shoppers to the machine, which sits alongside the fresh cheese counter, with many trying the free samples on offer. In the pre-Christmas scrum was American visitor Andy Sandler, with his wife Jill, from Kansas City who bought a bottle and immediately downed half of the contents: "We can buy raw milk from a few decent farms back home and it really is a great taste," he said from underneath his milk moustache.

David Monne, who works in the store, said he drank raw milk in his native Spain but had found it impossible to buy in the UK. "I'll be back to buy some," he said. "It's a great flavour on its own, but I will also use it to make milkshakes."

Nick from Kensal Green, north-west London, enjoyed his tipple: "It's wicked. I'd buy it from the supermarket, but it's not practical to buy it here and lug it all the way home. But it's properly additive-free and tastes great – why is the FSA making such a fuss?"