Cardiff Council says it has withdrawn all Welsh Bros Foods beef products from its schools, leisure centres and care homes.
It follows news that a sample of frozen minced beef supplied by the Newport-based company has reportedly tested positive for horsemeat.
Pembrokeshire Council has also withdrawn mince from its menus following the announcement.
No products have yet tested positive for equine DNA in Cardiff, but the council says it has taken the step 'as a precaution'.
I have no hesitation in taking this precautionary step whilst testing continues as it is vital that we do everything possible to identify whether there is any possibility of horsemeat DNA being in any of the products we use, and this process continues.
It is important that we move as quickly as possible to respond to the situation as it develops. I am pleased that so far we have not had any positive results for products we have tested for horse DNA but we have to continue to test and remain vigilant.
Welsh Bros Foods says it is 'deeply shocked' following the reported test result but believes it is an 'isolated incident'.
Approved supplier Welsh Bros Foods confirmed a sample of its frozen minced beef has 'potentially tested positive' for above 1% horsemeat.
The Welsh Government says it is working with the police to ensure allegations of horse meat at a plant in west Wales are dealt with.