The Food Standards Agency (FSA) is investigating whether meat infected with bird flu could have entered the food chain.
Nearly 160,000 turkeys were culled at the Suffolk farm
It reassured consumers that infected turkey posed no risk to human health if the meat was properly cooked.
But the government's chief scientist Professor Sir David King warned turkey products may have to be recalled.
Officials now believe the H5N1 strain of the virus found in Suffolk is linked to one found in Hungary last month.
A spokesman for Sainsbury's reported that the chain's poultry sales have dropped by 10% this week.
Bernard Matthews, the firm at the centre of the UK outbreak, has denied breaching rules on imports of meat.
The FSA confirmed it was looking into whether bird flu had entered the human food supply as part of the wider investigation into the outbreak at the turkey firm's farm in Holton.
"This is not a separate investigation," an FSA spokeswoman said.
Dr Andrew Wadge, the FSA's director of food safety, told Channel 4 News that he "certainly wouldn't rule out" a recall of turkey products.
"At the moment we think we need to establish the facts, rather than take a recall on the basis of no real risk to public health and of no evidence," he said.
"But the main concern would be about the spread of the disease to other poultry farms and the wild bird population, rather than being a food safety issue."
Also speaking on Channel 4, Sir David said the H5N1 virus could be picked up by other birds or animals if they came into contact with infected meat.
He added that while there was no risk to human health, as long as the meat was properly cooked, turkey products may now have to be withdrawn from shops.
"That sort of direct transfer is my biggest worry at the moment, because the transfer could occur through, for example, wild animals and wild birds," he said.
"So the real concern now is whether or not the virus is isolated to the birds that have been culled or whether it has moved beyond that."
Earlier this week, the cull of almost 160,000 turkeys at the Bernard Matthews plant was completed, after the discovery of the H5N1 virus.
The Health Protection Agency announced they had identified 400 Bernard Matthews workers who are likely to have been in contact with contaminated turkeys.
All have been offered the seasonal flu vaccine and 200 of them had already come forward, it said.
The government said there were no plans to recall turkey products from supermarket shelves.
Environment minister Ben Bradshaw told the BBC's The World At One programme: "Their [the FSA] latest advice was that they did not think a recall would be necessary because, as they have said on many occasions, there is no risk to human health from consuming turkey products."
FSA veterinary director Alick Simmons added: "The poultry meat in your fridge does not represent a public health risk provided you follow the normal rules and advice we provide about cooking."
Defra's Deputy Chief Veterinary Officer, Fred Landeg, said evidence now suggested the virus may have travelled from Hungary in meat products rather than entering the farm via migrating wild birds.
FSA COOKING ADVICE
After cooking a whole bird, pierce the thickest part of the leg with a clean knife or skewer. The juices should run clear
The juices should not have any pink or red in them and there should be no pink meat
People are advised not to eat raw eggs or use raw eggs in dishes that will not be cooked
Eggs should be cooked until the whites are solid
Bernard Matthews has trucked partly-processed turkey from Hungary to its plant in Holton every week.
But it has now halted Hungarian imports and exports as a precaution while Hungarian and UK government vets carry out their investigations.
However commercial director Bart Dalla Mura has defended the company's import practice, saying there were no restrictions on importing material from Hungary from outside restricted areas.
He said the firm had not brought any poultry or meat products from inside the infected region into the UK.
"We have made all our checks and they have come from nowhere near the restricted region. That is what our paperwork says to us," he said.
The company has a processing plant in Sarvar, in Hungary - about 160 miles away from where the bird flu outbreak occurred on a goose farm near Szentes.
Mr Dalla Mura rejected suggestions that the firm had kept quiet about the imports.
Following an emergency meeting of Cobra - the government's civil contingencies committee which leads responses to national crises - Mr Bradshaw said the government was looking into whether there had been "biosecurity breaches" at the Holton farm.
He said Hungarian authorities were also "investigating the possibility that product had come from their slaughterhouse closer to the restricted area".
Meanwhile Conservative shadow environment secretary Peter Ainsworth has written to Environment Secretary David Miliband, demanding a public statement to clarify why he and Environment Minister Lord Rooker did not mention the Hungarian link in a previous Parliament briefing earlier this week.
Mr Ainsworth said in his letter: "I hope you will also agree that the present climate of speculation and rumour is deeply unhelpful to the UK poultry industry and to public confidence in poultry products."