Three mute swans in Dorset have been found dead with the virulent H5N1 strain of bird flu.
Officials are trying to establish how the virus spread
Other birds are being tested at Abbotsbury Swannery, near Weymouth, but so far culling has been ruled out.
Acting Chief Veterinary Officer Fred Landeg said: "Our message to all bird keepers, particularly those in the area, is that they must be vigilant."
Prime Minister Gordon Brown said the government would do "everything we can" to stop the spread of infection.
He said: "We have had to deal with this issue before and the important thing is that people know we have placed protection zones around the affected area."
BBC environment correspondent Sarah Mukherjee said officials would now try to establish how the virus spread.
The swans' carcasses were found following routine surveillance, a statement from Defra said.
Defra said government vets had been testing them for avian flu for the last two days.
Culling of wild birds has been ruled out because experts fear this may disperse birds further.
It has set up two restricted areas - a wild bird control area and a larger wild bird monitoring area.
The control area extends approximately 15 miles (25km) to the south east of Abbotsbury, and includes the town of Weymouth, Chesil Beach and the Portland Bill headland.
Bird owners must isolate their flocks from wild birds within the zone.
Defra said the size and shape of the zone was decided based on expert ornithological advice.
John Houston from Abbotsbury Swannery, which holds 600 swans, said staff were working closely with Defra officials.
He said: "We are very concerned, but we have been encouraged by Defra's comments about the situation of outbreaks in wild ducks.
"In those, experience has been a very low mortality of the ducks, perhaps only 1%, and almost immediately or very quickly there has been a build-up of immunity to the virus within the ducks.
"We are hoping that that scenario within the ducks will be repeated by the swans here at Abbotsbury."
He said staff entering the site were wearing protective suits, and removing them and disinfecting themselves on leaving.
"We are also working with the Health Protection Agency to ensure that staff and public are fully protected."
Conservative MP Oliver Letwin, whose West Dorset constituency includes Abbotsbury, said he was glad to see the outbreak being "treated with the seriousness which it deserves".
"I very much hope that we will get through this with the swannery intact because it is a remarkable national institution of real beauty and real ecological significance," he said.
The discovery in Dorset is the latest in a series of bird flu cases in the UK.
In November 2007, around 5,000 birds were slaughtered after the H5 strain of avian flu was confirmed in turkeys at Redgrave Park Farm, Suffolk.
Previously, a strain was found in chickens at a Norfolk farm in April 2006 and the month before that the deadly H5N1 strain was found in a dead swan on the Fife coast.
Andre Farrar of the RSPB said no-one should be surprised that there had been a further case of H5N1 in the wild bird population.
He added: "It does seem to be the case that we are going to have to live with this particularly virulent disease.
"Let's hope that this is all we are going to see of it and monitoring and vigilance will hopefully show that over the next few days. "
Defra telephone helpline - 08459 33 55 77