Food companies will be ordered to test their beef products after some Findus beef lasagnes were found to contain up to 100% horse meat, the Food Standards Agency (FSA) said.
It was "highly likely" that criminal activity was to blame for the contamination, the agency added, as consumers were warned not to eat the meals.
Findus UK tested 18 of its beef lasagne products and found 11 contained in the range of 60% to 100% horse meat, the FSA said.
The frozen food company has now apologised to customers and said refunds would be offered to anyone who bought the affected lasagne products, which were made by French food supplier Comigel.
Retail giant Tesco and discount chain Aldi have withdrawn a range of ready meals produced by Comigel over fears that they contained contaminated meat.
Catherine Brown, chief executive of the FSA, told BBC News: "This is an appalling situation.
"I have to say that that the two cases of gross contamination that we see here indicates that it is highly likely there has been criminal and fraudulent activity involved."
She added: "We are demanding that food businesses conduct authenticity tests on all beef products, such as beef burgers, meatballs and lasagne, and provide the results to the FSA. The tests will be for the presence of significant levels of horse meat."
There is no evidence to suggest the horse meat found is a food safety risk, the FSA said.
But the agency confirmed tests have been ordered on the lasagne for the veterinary drug phenylbutazone or "bute", which is banned from entering the food chain.
The FSA added: "People who have bought any Findus beef lasagne products are advised not to eat them and return them to the shop they bought them from."
A Findus UK spokesman said: "We understand this it is a very sensitive subject for consumers and we would like to reassure you we have reacted immediately. We do not believe this to be a food safety issue.
"We are confident that we have fully resolved this supply chain issue. Fully compliant beef lasagne will be in stores again soon.
"We would like to take this opportunity to apologise to our customers for any inconvenience caused."
Findus UK withdrew its 320g, 360g and 500g lasagne meals from supermarket shelves as a precautionary measure earlier this week.
It came after Comigel alerted Findus and Aldi that their products "do not conform to specification".
It advised them to remove Findus beef lasagne and Aldi's Today's Special frozen beef lasagne and Today's Special frozen spaghetti bolognese.
Tesco also decided to withdraw its Everyday Value spaghetti bolognese, which is produced at the same Comigel site.
The latest development in the contamination crisis comes days after supermarket chain Asda withdrew products supplied by a Northern Ireland company which was storing meat found to contain a high proportion of horse DNA.
Newry-based Freeza Meats had been storing the consignment of meat, which was labelled as beef, on behalf of a supplier in the Irish Republic - Co Monaghan-based meat trader McAdam Foods.
Two tested samples were found to contain 80% horse meat.
McAdam Foods has insisted it had no knowledge that any of its meat contained horse DNA. It claimed the contaminated produce originated in Poland.
The meat had not entered the food chain and was not destined for Asda stores.
Asda acknowledged that no trace of equine DNA had been found in products made by Freeza Meats, but said it was still temporarily removing its burger range from its stores as a precaution.
The Irish meat-processing industry has been rocked by the horse meat crisis, with a number of suppliers being caught up in the scare.
Authorities on both sides of the border have pledged to restore the sector's battered image, while police in the Irish Republic have launched an investigation.
Shadow environment secretary Mary Creagh said: "The Irish Government has called in the police and fraud experts to investigate the horse meat fraud, yet complacent British ministers have not and are asleep on the job.
"The latest revelations raise questions about the extent of this scandal - this is no longer just a food safety issue but possibly a criminal trade.
"The public must have confidence that the food they buy is properly labelled, legal and safe to eat, whether it is purchased from a supermarket or in a school canteen."
Ms Creagh said she would not currently eat any processed food labelled as containing beef and urged ministers to give advice to consumers on whether they should do the same.
"We've had 10 million beefburgers withdrawn," Ms Creagh told BBC Radio 4's Today programme. "What tests have been conducted on them, if any?
"The big concern for me now is corner shops, schools, hospitals, prisons, public-sector caterers, people who may have these products sitting in their fridges and freezers.
"There's been absolutely no advice from Government ministers about what people should do."
Asked if consumers should avoid eating processed foods from their freezers which are labelled beef, she said: "I certainly wouldn't, but I'm waiting for the Government, the experts, the scientists, to tell us and issue proper clear advice for consumers.
"It's simply not good enough for ministers to sit at their desks and pretend this isn't happening."
Ms Creagh said it was clear that there had been "widespread criminal activity", with adulterated products deliberately passed off as beef.
She added: "I raised with ministers the question of horses being slaughtered in the UK in abattoirs and testing positive for bute... Ministers reassured me at that point and pooh-poohed my concerns.
"It transpired in answers to my parliamentary questions that six animals had actually entered the human food chain - five in France, one in the UK - and two animals have still not been traced by the FSA."