The UK government has suspended the manufacturing licence of major flu vaccine maker Chiron.
Vaccines have cut flu rates
The Medicines and Healthcare products Regulatory Agency said the three month suspension would take place with immediate effect.
The suspension means the Oxford-based company, which makes Fluvirin, will not be able to supply flu vaccines to anyone, including the major US market.
There are concerns about the way the vaccine is manufactured.
The MHRA decision could have a particularly severe impact in the US, as Chiron is responsible for half of the flu vaccines distributed in the country.
In the UK doctors have been advised to prioritise the most vulnerable patients until supplies return to normal.
Despite government assurances that the suspension will have a minimal impact in the UK, the British Medical Association insists it could cause serious problems.
Dr Hamish Meldrum, chairman of the BMA's GPs committee, said: "This will have a significant impact on the flu immunisation programme in this country and the impact will be patchy.
"This is because practices tend to get their whole flu vaccine supply from one supplier.
"Those practices affected by the shortage will have to cancel flu immunisation clinics until doses come through."
In August, Chiron announced that millions of flu vaccines made in Liverpool were contaminated, and delayed shipment to the US until October.
A company spokesman said extensive tests and safety checks had subsequently been carried out, and the company was confident that its products now met the highest standards.
He said the MHRA decision was unexpected, but he also said Chiron would immediately begin discussions to determine what further action was required to meet UK safety standards.
In a statement, the company said the MHRA suspension would mean that it would be unable to release any of its products during the 2004-05 flu season.
Chiron is one of six suppliers of the flu vaccine in the UK.
The Department of Health said of the 14 million doses of flu vaccine they had ordered, Chiron had only been due to supply 2.4 million.
Contingency plans had been made to ensure adequate stocks would be available to meet any potential shortfall.
However, it admitted some people might experience a delay in getting their regular innoculation. It is recommended that flu vaccines should be administered in the UK by early November, before cases start to mount.
A spokesperson said: "We are confident that we have sufficient vaccines for this winters campaign and contingency supplies will be available as soon as possible.
"We have arranged for an extra 1.2 million doses to be available to doctors' surgeries by the end of October and a further 1 million by mid-November."
Dr Douglas Fleming, director of the Royal College of GPs' Birmingham Research Unit, said: "I am confident that we will have enough vaccine for the winter.
"In the case of delays I would advise all Healthcare Professionals administering flu vaccines to concentrate on the most at-risk until supplies have returned to normal."
The World Health Organization said the suspension could have a major impact elsewhere - particularly as the flu season is just beginning in the northern hemisphere.
Dr Klaus Stohr, the WHO's flu chief, said: "The implications may be significant. There could be a shortage.
"It may be resolvable but that would require a lot of adjustment on the part of the other
Chiron makes a total of four flu vaccines: Agrippal, Begrivac, Fluad and Fluvirin.
The last of these is the number two flu vaccine in the US, which accounts for the majority of supplies, although 20% go to the UK and Europe.
Geoffrey Porges, a market analyst with US firm Bernstein & Co said: "The fact that the US will potentially only have 50m doses is a public health nightmare."
Vaccine makers do not have a lot of spare stock because they produce on demand.