Supermarkets have been told by ministers to stop selling processed food containing cheaper foreign meat with labels suggesting it is British. The Environment Secretary, Hilary Benn, said retailers were undermining the Government's drive to persuade shoppers to buy British and putting at risk the Government's policies on food security and animal welfare.

A labelling loophole allows grocery chains to mark products as "Produced in the UK" if the last significant change to it took place in Britain, even if the main ingredient comes from abroad.

As such, they can legally label chicken sandwiches as "Produced in the UK", even if the chicken has come from intensive poultry sheds in Thailand, because they have placed the chicken between bread and, similarly, sell ready meals containing cheap foreign pork.

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In a selection of "Produced in the UK" goods on sale yesterday, Tesco was selling chicken sandwiches with imported poultry, Somerfield "Wiltshire cured bacon" from Denmark, and Asda Cornish pasties with beef from Ireland.

In an interview with The Independent, Mr Benn said that Britain was lobbying for new European laws that would outlaw the practice – which he described as "hard to justify".

At a meeting at Department for Environment, Food and Rural Affairs (Defra) last week, he and the Farming minister Jane Kennedy urged stores to stamp out misleading labelling before the new legislation comes into force in several years.

Tesco and Sainsbury failed to turn up to the meeting, which was attended by Asda, Morrisons, Waitrose, Marks & Spencer and the British Retail Consortium, which represents all big stores.

Mr Benn suggested to the Food and Drink Federation this week that manufacturers should state the percentage of British ingredients in ready meals, pies and other products.

He told The Independent that labelling of fresh meat was generally good but he suggested some products were giving a false impression to consumers.

He said: "If you buy something that has on the package 'Wiltshire cured bacon', I think most people would assume the bacon came from Wiltshire, but under the current European rules that is not necessarily the case. You may turn it over and discover that actually it came from Denmark. Or if you buy, for example, Cumberland sausage you might assume that that is where the pork came from, but then you discover it's not from there – it's from somewhere else.

"So, we are pressing strongly in Europe... because consumers are not getting clear information. "

"We know a great deal about the origin of our car or the house we buy," he added. "I think we should have better information about where our food comes from."

Farmers' representatives welcomed the minister's "excellent" contribution, which it hoped would raise pressure on the stores to increase their backing for Britain's 152,000 farmers. Helen Ferrier, chief scientific adviser for the National Farmers' Union, said: "If people do want to buy British, we want them to be able to go into a shop and easily find those products – and at the moment they can't. The extra element of advantage our members might have over Dutch or Brazilian producers is not there."

Supermarkets defended their labelling, saying that they could not always source British meat or were supplying "value" products that consumers would not expect to have come from within the UK.

Tesco said: "'Produced in the UK'... will be in small writing on the back of pack and is intended only to indicate where the food has been produced. It is not used in a way that suggests any of the ingredients are British and is not used to market the food as a 'British' product."

Somerfield said of its Wiltshire cured bacon: "The suggestion that customers automatically think the pigs are reared in Wiltshire is questionable. But we will revisit how we label country of origin in that product."

Confusion about country of origin labelling was raised by the TV chef Jamie Oliver last night in his show, Jamie Saves Our Bacon, in which he criticised grocery stores for their labelling of pork.

Setting out the Government's stance, Mr Benn said that he wanted to ensure the UK had a thriving farming sector at a time when the rapidly rising global population might reduce the willingness of other countries to export food to the United Kingdom.

He has been working on improving labelling for a month, having warned that government policy could only be allowed to take place if shoppers were informed of the origin of their food.

"I think the public and I have the opportunity to raise that and change it because it is clearly wrong that something should be labelled in a way that makes people believe that the meat product came from somewhere it didn't come from.

"It seems to me that is wrong. It needs to change," Mr Benn said.