The meat was part of a consignment of 220lb (100kg) of equine flesh labelled as "diced beef" that was imported from Hungary and discovered by Lancashire County Council, the FSA said.
It was imported by Hungarian Food Ltd in Preston, Lancashire, and sold in 1kg bags on its market stall in the town and by a deli, Taste of Hungary, in Merseyside.
The rest of the meat has been removed from sale and is being tested by the local authority for the veterinary drug bute.
The discovery is the latest in the ongoing scandal over horsemeat and other contamination of food.
Many of the UK's biggest food firms and supermarkets have recalled beef products after tests found they contained horse DNA.
Aldi, Findus, Co-op, Tesco, Asda, Taco Bell, Birds Eye, Sodexo, Whitbread, Birds Eye, Brakes and Rangeland have all been found to have con-taminated products.
