Contaminated horsemeat could prove "injurious" to people's health, the environment secretary Owen Paterson said on Sunday as he served notice on the public to expect "further bad news" this week.

Amid fears in Downing Street that the ministerial team at the environment department is struggling to get a grip on the crisis, Paterson said "an international criminal conspiracy" may be behind the introduction of dangerous meat into processed food.

"We may find out, as the week progresses as the tests begin to come in, that there is a substance which is injurious to human health," Paterson told LBC 97.3 Radio. "We have no evidence of that at all at the moment. At the moment this is a labelling issue."

Patersons's remarks were the first government acknowledgment of a possible health threat after the discovery that food labelled as beef contained horsemeat. Last week it emerged that Findus lasagne contained up to 100% horsemeat. The Food Standards Agency is conducting tests to discover whether the veterinary drug phenylbutazone, known as bute, is in some of the horsemeat. Meat with the drug is not allowed to enter the human food chain.

On BBC 1's Sunday Politics, Paterson warned of bad news this week when the tests are completed. "We do not know how far this incompetence or worse, criminal conspiracy, extends," he said. If a health threat is detected, he may ban the import of processed meat: "If we find there's a product which could potentially be injurious to public health, then emphatically I would take necessary action," he said.

British authorities have contacted French police to investigate procedures at Comigel, the French plant which produced the Findus lasagne found to contain horsemeat. The focus moved to Romania on Sunday after the company that supplied the meat, Spanghero, said it would sue its Romanian supplier for fraud.

On LBC, Paterson agreed there would be a whole new ball game if horsemeat had come from Romania contaminated with equine anaemia, known as "horse Aids" even though it is not harmful to humans. "Romanian horsemeat is not allowed in," Paterson said. "We are quite clear that if there has been criminal behaviour we will work with the authorities right across the continent in bearing down on this."

He admitted that people could still be unknowingly eating horsemeat. "That is why we're carrying out this unprecedented screening of processed beef products. It looks as if the problem is limited to processed beef, and it looks as if there has been criminal substitution of beef with horse." But the current evidence suggested there was a problem of false labelling rather than a threat to public health. "This issue is an issue of labelling and fraud. This is a conspiracy against the public. Now, it's either a case of gross incompetence or, as I said yesterday, I've got an increasing feeling that it is actually a case of an international criminal conspiracy."

Downing Street is concerned that Paterson and David Heath, the Liberal Democrat environment minister, have been less than surefooted. Officials were astonished to discover that the two ministers returned to their rural constituencies on Friday, though Paterson chaired crisis talks in London over the weekend.

A Defra spokesman said: "There is currently no evidence of a risk to human health. Owen Paterson was quite clear that while we must be prepared to find more evidence of fraud, there is not a food safety risk at present.

"The FSA has said that unless there is advice to avoid a specific product, there is no reason for people to change their shopping habits. There is no reason to believe that processed beef products currently on sale are unsafe.

"Consumers have a right to expect that food is exactly what it says on the label. The Government and the FSA are working with authorities across Europe, including Police, to get to the bottom of this unacceptable situation. If criminal activity is discovered we will take whatever action is necessary."