Sheffield Council has said it has suspended the use of all processed meat in school meals with immediate effect.
In a joint statement with caterer Taylor Shaw, it said:
Although we have been given assurances by our suppliers about the provenance of the pre-prepared food, we take the safety of the young people in our schools very seriously.
In light of the ongoing revelations of alleged illegal activity by unscrupulous people regarding the contamination of processed meat products this week, as a precaution we have taken the joint decision to suspend the use of all processed meat products in all school meals with immediate effect.
We hope that this will reassure parents and carers who may have any reservations about their children's school meals.
Food Standards Agency (FSA) Chief Executive Catherine Brown has drawn vets and horse owners into the conspiracy behind horsemeat containing bute getting into the food chain.
Ms Brown highlighted that both had to sign horse passports if an animal was treated with the drug to ensure they were not sold on for human consumption.
"If both these people have done the right thing, horses with bute in don't make their way into the food chain," she said. "Someone has always broken the rules".
Previously the FSA said testing for bute is a "good indicator" of whether an animal was legally slaughtered.
When asked whether it would be fair to assume that six percent of the 9,000 horse carcasses she said were exported from Britain every year - which amounts to 540 animals - contained bute, Ms Brown replied, "That seems as reasonable a basis for making an estimate as any other".
The Commons Environment, Food and Rural Affairs Committee chairman Anne McIntosh described the scale of the contamination in the food chain as "breathtaking" and warned that restoring consumer confidence would take time and money.
The Government has a role to secure the correct balance between affordable food prices and effective regulations that require transparency and quality.
The consumer cannot be left to face a Catch 22 where they can either pay for food that complies with the highest standards of traceability, labelling and testing or accept that they cannot trust the provenance and composition of the foods they eat.
Ministers are facing calls from MPs for more testing of processed meat amid fears that beef products contaminated with horse meat could contain substances harmful to humans.
In a scathing report, the Commons Environment, Food and Rural Affairs Committee condemned the Government's "flat-footed" handling of the horse meat scandal, saying its ability to respond had been weakened by cuts to the Food Standards Agency (FSA).
The committee said the public appeared to have been "cynically and systematically duped" for financial gain by elements of the food industry - raising wider concerns about the safety of the contaminated products.
It seems improbable that individuals prepared to pass horse meat off as beef illegally are applying the high hygiene standards rightly required in the food production industry.
We recommend that the Government and FSA undertake a broader spectrum of testing for products found to have the highest levels of contamination ... to provide assurances that there is no other non-bovine DNA or any other substances that could be harmful to human health present.
Number 10 sources say that the Food Standards Agency raid on Farmbox Food was the result of investigations which began in mid-January. It was part of co-ordinated action by officials, agencies and the police across the UK and at a European Union level.