Up to 1000 people could die of the human form of "mad cow" disease through infected blood given to them in British hospitals, ministers have been told.
Government experts believe there is still a risk of people contracting variant Creutzfeldt-Jakob Disease (vCJD) through blood transfusions, as about 30,000 Britons are likely to be carrying the brain-wasting illness in a dormant form - double the previous estimate.
They warn that the current total death toll of 176 from vCJD could rise more than fivefold as the infection has not been wiped out of the blood supply as it has been in the food chain.
Frank Dobson, a former Health Secretary, urged ministers to develop a nationwide screening programme for blood donors to stop future infections of vCJD, which had the potential to cause "horrendous deaths".
People are no longer in danger of getting vCJD from eating British beef, after ministers ordered the slaughter of millions of cows when the mad cow disease scandal broke in 1989.
Fears that hundreds of thousands of people could contract the human form of bovine spongiform encephalopathy (BSE) proved unfounded.
However, the Government acknowledges that one in 2000 Britons - or approximately 30,000 people - are already "silent" carriers of infectious proteins that lead some people to develop vCJD.
A little-reported study last year concluded the prevalence of this "silent" vCJD was likely to be twice as high as previously thought.
These 30,000 carriers can unknowingly pass on the infectious proteins - known as prions - to new potential sufferers through donated blood.
Because so little is known about vCJD, there is no telling which carriers will go on to develop the disease or whether any new cases will actually materialise at all.
There have been no new cases for two years and there are thought to be no surviving sufferers of vCJD.
However a new risk assessment published by the Government's Health Protection Analytical Team reveals that infected blood donations could cause up to 1000 deaths in a high case scenario. About half of the cases could develop in people who have already received blood transfusions.
It suggests ministers could consider recruiting blood donors born after 1996 once they become eligible, as they will not have eaten infected beef.
"The number of 'silent' vCJD infections associated with transfusion would be much higher than the number of clinical cases," it said.
"It is therefore important to maintain, and if possible enhance, measures to prevent onward transmission of infection, notably the exclusion of recipients from donating blood."
Dobson, the former Labour Health Secretary, said "everything humanly possible should be done to develop a blood test".
"There is no room at all for complacency. With a blood test, you would be able to screen every potential donor."
Professor John Collinge, an expert from University College London, whose research unit has developed a blood test for vCJD, said there was an element of "wishful thinking" within the Government, with officials hoping the problem had gone away.
Sir Paul Beresford, an MP and former Conservative Environment Minister, is campaigning for more filtering of donated blood.