Tests on a Perthshire sheep, thought to have been showing symptoms of foot-and-mouth disease, have come back negative.
Farmers have expressed grave concern over the latest restrictions
Animal Health agency vets completed their investigations on the animal, which was sent for slaughter to an abattoir in the south of England.
The Scottish Government urged livestock keepers to remain vigilant despite news that the sheep was not infected.
The animal was one of 131 dispatched to England from Perthshire for slaughter.
A UK-wide ban on the movement of livestock was reinstated on Wednesday after confirmation of a new case of foot-and-mouth at a farm in Egham, Surrey.
Despite the ban, permission has been given for auctions to take place in Dingwall, Ayr, Lanark and Thainstone in Aberdeenshire after animal welfare concerns were expressed.
Officials in Ayr said that although permission was given for the auction to go ahead, the event had been cancelled.
There has also been some relaxation of the ban in Scotland for animals moving direct to slaughter, where there are welfare concerns, and for those due for milking.
Mr Milne said that a policy of "regionalisation", where parts of the UK are declared free from the disease, was being considered.
However, he stressed that any decision was a long way off, as it had to be made in conjunction with Europe.
Mr Milne said that some relaxation of livestock movement had already taken place.
Curbs were reintroduced on Wednesday after a new case
"I can report that animals are being slaughtered today," he said.
Relaxation includes movements between Scotland's islands, but not between the islands and the mainland.
Scotland's chief vet added: "I recognise this is a devastating blow for the industry in Scotland.
"We have only just moved out of the restrictions imposed in August.
"There is a huge number of movements required to get sheep off the hills. We are aware of all these issues and we are working to try and alleviate problems as quickly as possible but only when it's safe to do so."
The news of the confirmed case in Egham comes just a week after Britain was declared free of the disease.
Preliminary tests indicated that the strain was the same as that found in the county last month.
Rural Affairs Secretary Richard Lochhead said work was continuing to establish the likelihood of the disease spreading from the farm at Egham.
He said: "If it is the same strain as the previous outbreak, that gives us an idea that hopefully this may be contained in the Surrey area.
"But of course, we're not that far along yet and my job just now is to make sure that we can trace any cattle movement from the Surrey area to Scotland that may have occurred over the past few days and weeks."
Farmers in the north of Scotland said news of the outbreak in England could not have come at a worse time as tens of thousands of sheep and cattle are normally shipped from island communities to the mainland in September and October.
Animal welfare concerns led to a special exemption being given to Dingwall and Highland Marts to sell 3,500 lambs, sent for sale from the Western Isles.
However, the disease outbreak has led to the cancellation of the Dectomax Kelso Ram Sales in southern Scotland.
More than 6,000 rams were set to be auctioned at the Springfield Park event on Friday.
Organisers said it was now "very unlikely" they would be able to hold the event at a later date this year.