The investigation is focused on egg suppliers
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The illegal labelling of some 30 million eggs produced in the UK is being investigated.
The probe has found evidence of non-free range ones being labelled as free range, officials have said.
They are calling on industry chiefs and retailers to make sure the eggs they are selling to the public are all correctly labelled.
The investigation is centred on the collection and supply of eggs and not the original production.
Concerns
The Department for Environment Food and Rural Affairs (Defra) said prosecutions could be brought as a result of the ongoing inquiry.
A spokesman said the department had decided it was in the public interest to ask the industry to ensure illegal labelling was no longer taking place.
Of the three billion free range eggs produced each year Defra is investigating the labelling of one per cent - some 30 million eggs.
Concerns over egg labelling emerged during inspections carried out by Defra, under EC egg marketing regulations.
'No health risk'
A spokesman for the British Egg Industry Council, which represents producers and packers, said it was deeply concerned about allegations of irregularities.
The council had asked Defra "both verbally and in writing for full details of its investigations but these have not been forthcoming.
"It is keen to assist in any possible way to ensure that immediate action is taken to eliminate any irregularities.
"There is no suggestion of any public health risk arising from the allegations and consumers should continue to look for the British Lion mark on the egg box and eggshell to ensure that they are buying eggs produced to the highest standards."
A Defra spokesman said: "We are calling on people to make sure that the eggs they are supplying are what they say they are."