Health officials say a Tamiflu-resistant strain of swine flu has spread between hospital patients.
Five patients on a unit treating people with severe underlying health conditions at the University Hospital of Wales, Cardiff, were infected.
Three appear to have acquired the infection in hospital.
They are thought to be the first confirmed cases of person-to-person transmission of a Tamiflu-resistant strain in the world.
There have been several dozen reports around the world of people developing resistance to Tamiflu while taking the drug - but they have not passed on the strain to others.
Just one possible case of person-to-person transmission of a resistant strain has been recorded - between two people at a US summer camp - and this has never been confirmed.
Two of the University Hospital of Wales patients have recovered and have been discharged from hospital; one is in critical care and two are being treated on the ward.
The health officials stressed there was no risk to anyone else.
They said tests were being carried out to confirm exactly what happened.
The UK has bought enough doses of Tamiflu, which can shorten the duration of swine flu and reduce the risk of complications, for half the population.
So any spread of a Tamiflu-resistant strain of the illness is a serious public health concern.
The H1N1 virus has been remarkably stable since it emerged in April, but virologists had been half expecting new resistant strains to emerge.
Dr Roland Salmon, director of the National Public Health Service for Wales' Communicable Disease Surveillance Centre, said: "The emergence of influenza A viruses that are resistant to Tamiflu is not unexpected in patients with serious underlying conditions and suppressed immune systems, who still test positive for the virus despite treatment.
"In this case, the resistant strain of swine flu does not appear to be any more severe than the swine flu virus that has been circulating since April."
Dr Tony Jewell, Chief Medical Officer for Wales, said: "We know that people with suppressed immune systems are more susceptible to the swine flu virus, which is why they are a priority group under the first phase of the vaccination programme in Wales which is progressing at pace.
"We have stringent processes in place for monitoring for antiviral resistance in the UK so that we can spot resistance early and the causes can be investigated and the cases managed.
"Identifying these cases shows that our systems are working so patients should be reassured.
"Treatment with Tamiflu is still appropriate for swine flu and people should continue to take Tamiflu when they are prescribed it.
"It's also important that good hygiene practices are followed to further prevent the spread of the virus."
Professor Peter Openshaw, a respiratory physician at Imperial College London, said of the spread: "It's not surprising that this has happened, indeed it has always been anticipated".
Dr Ronald Cutler, deputy director of biomedical science at Queen Mary, University of London, said: "Shortening the time taken to produce new vaccines and improving the methods to control and treat the disease while vaccines are being made would be a way forward".
On Thursday it was announced that more than three million healthy children under five across the UK will be offered the swine flu jab.
Figures released on Thursday showed an estimated 53,000 new cases of swine flu in England in the last week, down from 64,000 in the week before.
In Scotland, the figure was 21,200, down from about 21,500 in the previous seven days.
The rate of flu-like illnesses diagnosed by GPs in Wales dropped to 36 cases for every 100,000 people from 65.8 the previous week.