Roy Stevenson was a senior quality controller for more than a decade at one of the UK's largest poultry abattoirs, in Scunthorpe, until the end of 2012 when he was made redundant. Owned by the 2 Sisters group, the factory still supplies many leading supermarkets and fast-food chains. After the Guardian investigated this factory and others this year to understand why so much chicken across the industry was contaminated with the food poisoning bug campylobacter, Stevenson decided to come forward. He wanted to explain what is was like when he worked there, and why there can be such a gap between what auditors see and what workers feel is the reality on the factory floor

The government's food watchdog has been forced to admit that an initial inquiry which cleared one of the UK's largest poultry processing plants of hygiene failings was misleading.

Instances of chickens being dropped on the floor then returned to the production line, documented by a Guardian investigation into failings in the poultry industry, constituted a "breach of the legislation", the Food Standards Agency has now acknowledged.

Following the Guardian revelations at the site in Scunthorpe in July, the health secretary, Jeremy Hunt, asked the FSA to investigate. It rated the factory as good and wrote to the shadow food and farming minister saying there was no evidence of any breaches of food hygiene legislation.

But in an embarrassing climbdown less than a month on, the FSA has written to Labour's Huw Irranca-Davies admitting it was wrong. It has reviewed the Guardian's undercover footage showing dirty birds from the floor being thrown back into food production and concluded there has been a serious breach. But it has not issued a penalty, saying the company has assured it the problem has been addressed.

The admission comes as fresh allegations of hygiene failings at the factory emerged, with three former employees making claims about dirty chickens contaminating the production line and attempts to manipulate inspections up to 2012.

Labour said the FSA admission and the new questions over safety raised serious questions about the poultry inspection system in the UK.

Irranca-Davies said government inaction was damaging confidence in the food industry. "First we were told that there had been no breaches of hygiene regulations, then the FSA writes to clarify that a breach of hygiene regulations did in fact take place, but that no enforcement action will be taken," he said.

"Consumers rightly demand that the meat they buy in supermarkets is of good quality and has been processed safely and hygienically in line with the law. Consumers will wonder why no enforcement action has been taken when breaches of hygiene regulations have occurred."

The Guardian investigation last month revealed poor practice at the abattoir in Scunthorpe. It is owned by the 2 Sisters group, which supplies many of the leading supermarkets and fast-food restaurants, including Tesco, Sainsbury's, Aldi and KFC. Hunt asked the FSA to audit the abattoir in the wake of the revelations.

Despite supermarket audits of this and another site suggesting that improvements were needed, the FSA did not alter its rating of the factory, or issue any penalty, because the company said during the official audit that it had taken action to ensure it did not happen again.

But now three workers who have been in charge of quality control at the factory in recent years have come forward claiming it was "an almost daily occurrence" for birds to fall on the floor and be put back into the food chain instead of being correctly disposed of as waste. The company initially denied any instances of this happening.

The sources also claimed that auditors were often hoodwinked, even when their visits were supposedly unannounced, as managers slowed production lines and cleaned up poor practice when they were present. One described his responsibility for ensuring production managers followed the company's own rules on food hygiene and safety as "a war of attrition".

The footage above is of an abattoir in Scunthorpe owned by the UK's largest poultry processor, 2 Sisters. It supplies many of the leading supermarkets and fast-food restaurants. When the lines are running fast, chickens fall on the floor. They should go in to red bins for waste, not blue bins for human food. Our undercover filming shows a manager picking one up and throwing it back in to food production. 2 Sisters told us it had spoken to the individual concerned. The Food Standards Agency inspected the factory after seeing our film. It says there will be no penalty because the company has taken action to ensure this does not happen again. The FSA rated the factory as "good".

Concerns about hygiene standards in poultry production focus on preventing the spread of the food poisoning bug campylobacter. An estimated 280,000 people in the UK get sick each year because of it, and about 100 die. It is the most common cause of food poisoning, with chicken accounting for the vast majority of infections. The bug is killed by cooking but can spread easily from raw chicken.

The original Guardian investigation was prompted by insiders claiming that one reason campylobacter rates remained high was the gap between the industry's strict hygiene rules and auditing systems to check on them, and the reality on the factory floor, where managers were under pressure to process large volumes at high speed.

In a letter to Irranca-Davies, the FSA's chief executive, Catherine Brown, admitted "pretty much all UK chicken production facilities experience unacceptably high levels of contamination with campylobacter".

The Guardian's investigation also revealed failings and breakdowns at another 2 Sisters site in Llangefni, Anglesey, and at another large processor. Sources said these occurred at several key points in the chicken production chain which are known to be high risk for the spread of campylobacter. Breakdowns meant that high-risk offal, guts and feathers piled up for hours as production continued. In another incident, scald tanks were not cleaned for days, meaning hundreds of thousands of birds were processed through unchanged dirty water.

The FSA emergency audit of the Llangefni site rated it as "generally satisfactory". The Guardian understands that it was critical of the company for failing to cancel the day's slaughter when the scald tank incident occurred. Sources at the site said the tanks went uncleaned for three days; the company and the FSA say it was only two and that tests were conducted for bacteria counts before production was allowed to continue.

It is understood, however, that these tests were only for salmonella, not for campylobacter contamination.

The three new sources were all employed as quality controllers until 2012 at the Scunthorpe site. Roy Stevenson was in charge of a team of quality assurance technicians and worked at the factory for more than a decade until being made redundant at the end of 2012.

"On the day of the audit, all the lines would be slowed to a minimum where it was pristine," he claimed. "There would be no birds dropping on to the floor, an auditor would walk round and everything would look lovely, unlike any other day."

Richard Lingard worked at the factory as a quality controller for a few weeks in 2012 before moving on because he said it was impossible to do the job correctly. A third former quality controller with several years' experience at Scunthorpe in the recent past, who asked for anonymity, described being regularly undermined and bypassed when trying to enforce hygiene rules.

All three claimed birds fell on the floor regularly because the line speeds were too fast for workers to keep up, and they would then be recycled back into the food chain in breach of company policy. They allege that their efforts to stop this happening were undermined by production staff.

In response, 2 Sisters said audits could not be cheated and it had no way of knowing when unannounced ones would take place.

It denied that there was any "them and us" mentality between quality controllers and production staff, saying they worked in unison to continually improve standards.

Sources say the atmosphere at the Llangefni plant since the Guardian's revelations had appeared "chaotic" at times, with a stream of supermarket audits and "100% concentration" on cleaning and "getting everything clean and done right".

Following a surprise 4.30am check shortly after the first reports, during which workers were told a number of failings had been found, Tesco is understood to have returned to the Welsh plant last week for follow-up inspections. Marks & Spencer has also audited but found no breaches, and Sainsbury's audited Scunthorpe and suggested "improvements".

At crisis meetings at Llangefni after the original Tesco visit, senior management told staff of measures being taken to clean up the factory and change the way it had been working, according to sources.

They said these included bringing in extra cleaners, slowing production lines, ensuring production stopped more promptly at night so there was sufficient time for cleaning, and stopping slaughter when breakdowns occurred.

The Guardian has been told some staff have been asked to sign statements that they will not pick up birds off the floor and put back them back into production, and that only floor cleaners or supervisors were allowed to pick up carcasses from the floor.

The 2 Sisters Food Group said this was "standard business practice".

"In line with company policy, every year the company issues Conformance Certificates for Governance to all management and supervisors [which the] relevant employees in all sections of the business need to sign."

2 Sisters said in a statement: "We welcomed the recent FSA independent audit at two of our sites, which found no compliance issues. Both customers and our own internal investigations supported the FSA's findings.

"However, we are not complacent and we will carry on with our own continual improvement programme, taking on board learnings, investing in our colleagues, our factories and our product development. We will also lead on hygiene and continue with our industry-leading campylobacter trials to tackle this issue once and for all.

"We are determined to lead the poultry sector with best practice and compliance, and are always looking to improve standards across our operation."

The FSA defended its inspection regime, saying only meat that had passed "stringent safety checks" by its 1,100 frontline vets and inspectors was allowed to enter the food chain. It added that it had reorganised its structures so it has a dedicated team of veterinary auditors to ensure audits are rigorous and effective.