Environment Secretary owenOwen Paterson made the warning before heading to Brussels today for a summit on the scandal.
It came after the Food Standards Agency (FSA), accompanied by police, swooped on a slaughterhouse and a meat manufacturer after apparently uncovering "a blatant misleading of consumers".
Peter Boddy slaughterhouse in Todmorden, West Yorkshire, and meat processing plant Farmbox Meats in Llandre near Aberystwyth, West Wales, had records seized and have been temporarily closed. The firms' owners deny any wrongdoing.
At the Farmbox Meats facility, Sky News saw large crates of meat - some covered by tarpaulin and others open - left in outdoor areas during the night, before they were removed this morning.
Its owner, Dafydd Ffredric Raw-Rees, told Sky News no meat had been seized during the raid and said the plant was operating as normal today. The FSA subsequently confirmed it should not be.
The FSA, which is investigating claims the firms supplied and used horse carcasses in burgers and kebabs, says it has "detained" all meat found at both raided premises and seized paperwork and customer lists.
Speaking after the latest developments, Mr Paterson said: "This is absolutely shocking. It's totally unacceptable if any business in the UK is defrauding the public by passing off horsemeat as beef.
"I expect the full force of the law to be brought down on anyone involved in this kind of activity."
And David Cameron, speaking at PMQs, described the situation as "appalling" and "completely unacceptable".
"If there has been criminal activity, there should be the full intervention of the law," the Prime Minister said.
Until now, meat linked to the scandal is thought to have come from suppliers in continental Europe, but for the first time it appears the contamination may also stem from British premises.
Andrew Rhodes, FSA director of operations, said: "I ordered an audit of all horse producing abattoirs in the UK after this issue first arose last month and I was shocked to uncover what appears to be a blatant misleading of consumers.
"I have suspended both plants immediately while our investigations continue."
Slaughterhouse owner Peter Boddy said he would co-operate with FSA officers and claimed they had not "raided" his Todmorden premises.
"It was not a raid - they are welcome to visit whenever they want, they just wanted to see my records which I will be showing them," he told ITV.
Mr Paterson has met representatives of the Institute of Grocery Distribution, which represents food retailers and suppliers, to discuss plans for a new regime of quarterly testing of products.
Results of tests into the extent of contamination of beef products are expected on Friday.
Meanwhile, Waitrose announced it has withdrawn its beef Essential British Frozen Meatballs after pork was found in two batches. The supermarket said they were made at the ABP Foods-owned Freshlink factory in Glasgow last summer.
And on Tuesday Supermarket giant Tesco became the latest retailer to drop a major supplier after discovering a range of spaghetti bolognese ready meals contained more than 60% horsemeat.
Shadow environment secretary Mary Creagh called for Europe-wide testing of meat products, raising concerns that horsemeat sometimes contained the painkiller bute.
She said: "I raised the problem of bute-contaminated horsemeat being released into the food chain with Defra ministers last month, yet up until two days ago horses were still not being tested for bute and were being released for human consumption.
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