(Adds Hungarian Agriculture Ministry plan to file report)

By Adrian Croft

LONDON, Feb 11 (Reuters) - The British government on Sunday defended a decision to allow the import of turkey meat from Hungary after an outbreak of bird flu at an English farm that may be linked to an infection in the East European country.

The Sunday Times reported that 20 tonnes of turkey meat were imported from Hungary last Tuesday, three days after an outbreak of the deadly H5N1 virus was confirmed at a farm in Suffolk, eastern England, owned by Europe's biggest turkey producer.

Government inspectors knew the firm, Bernard Matthews, intended to import meat from a slaughterhouse 30 miles (50 km) from the site of a Hungarian bird flu outbreak in January, but did not intervene, the report said.

The Hungarian meat was processed at a Suffolk plant just a few hundred yards from the sheds where 160,000 turkeys were culled after the bird flu virus was found.

The Hungarian Agriculture Ministry said it would send a report to the European Union's executive on Tuesday which would remove any suspicion that Hungary was the source of the British outbreak.

British Environment Secretary David Miliband said EU rules restricted movement of turkey within a 30 km radius of an avian flu outbreak, but Britain would have been inviting retaliation if it had imposed a ban on all poultry from Hungary.

"What we've done, rightly, is to follow the scientific advice and to ensure that EU rules are rigorously implemented," he told the BBC.

The government initially said the British infection was most likely to have come from a wild bird.

It said on Thursday there might be a link with Hungary after tests showed the virus to be identical to the Hungarian one and it could have been spread by infected meat.

POULTRY IMPORTS SUSPENDED

Bernard Matthews then suspended the movement of poultry products between its British and Hungarian operations. The company said on Sunday it had not imported any turkey meat from farms within the Hungarian restriction zone.

Hungarian officials have said they are checking to see if there is a link between the two outbreaks, but are sceptical that live British birds could have been contaminated by a virus in processed meat. British officials say the virus could also have reached Britain on vehicles from Hungary.

In Budapest, an Agriculture Ministry spokesman was quoted by the national news agency MTI as saying: "Hungarian poultry meat exports cannot be the source of the bird flu (outbreak) in England.

"A report to be filed with the European Commission next Tuesday will unequivocally prove this."

Britain's Miliband said government agencies were working with Hungarian authorities and Bernard Matthews to track down a lapse in bio-security that had led to the Suffolk outbreak.

The country's food watchdog is investigating whether meat contaminated with bird flu has reached shops, but says there is no threat to consumers as long as meat is properly cooked.

Supermarket chain Sainsbury's on Friday reported a 10-percent drop in poultry sales but other retailers said they had seen no effect.

The H5N1 virus has spread into the Middle East, Africa and Europe since it re-emerged in Asia in 2003. Although it remains largely an animal disease, it can kill people who come into close contact with infected birds.

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