Rachel Morgan, from the BBC's Farming Today programme: "It would mean the destruction of a multibillion pound industry"

Further research is a "matter of urgency" according to Professor Jeff Almond, chairman of the sheep sub-committee of SEAC, which advises the government on BSE.

But the President of the National Farmers' Union, Ben Gill, has hit back at what he described as "the spreading of scare stories".

At the most extreme, the UK flock of 42 million could be slaughtered if traces are found. Only nine sheep have been tested for the disease since 1996, when it was established that BSE may be in sheep.

Environment Correspondent Richard Wilson reports on the case against lamb

Professor Almond said: "If we found BSE in sheep it would be a national emergency and I think politicians would have to think very hard about what the appropriate response should be."

He said that sheep had been the committee's main area of concern since 1996, when BSE was established as a danger in cattle and the beef ban began.

The Consumers Association is seeking advice on whether young children, who may yet not have been exposed to infected meat, should avoid lamb.

The Ministry for Agriculture has said that children are no more at risk than anyone else.

Prof Almond: BSE in sheep could mean a "national emergency"

Firm evidence of BSE infection in sheep is still believed to be several years away as research is only now being stepped up.

Mr Gill disputed the need for media attention to the issue. He said there was "no news here" and attributed the renewed questioning about BSE in sheep to "an old story resurrected by an article in Nature magazine".

"I don't believe spreading scare stories is the best way to support consumers," he added.

Dr Andrews: "The risk now is absolutely negligible"

One expert said that steps are being taken to reduce the risk of BSE to humans by restricting the use of meat and bonemeal in animal feed and removing risk materials at the abbatoir.

Former Senior Lecturer at the Royal Veterinary College, Dr Tony Andrews, said: "We can't deny that some people could possibly be incubating the disease."