A carcinogenic substance, the Food Standards Agency (FSA), identified the harmful dye in a Worcester sauce product produced by UK company Premier Foods.
Because the product is used as an ingredient in a number of branded and retailer own-label products, as well as being sold as bottles of Worcester sauce, the recall of over 350 products marks one of the largest ever carried out by the FSA.
Banned in 2003 under European Union rules, Sudan dye, also known as 'scarlet red', has since been found in a range of UK chilli powders and curry powders, as well as more than 200 food products ranging from pesto sauce to chicken tikka masala.
But the scale of this latest recall will provoke concern among stakeholders involved in the food chain.
Although the food agency sought to calm consumers.
"At the levels present the risk is likely to be very small but it is sensible to avoid eating any more. There is no risk of immediate ill-health," said Dr Jon Bell, chief executive of the FSA, on Friday.
Believed to cause cancer if consumed in large enough quantities, Sudan I - IV is a forbidden colour under the Colours in Food Regulations 1995.
What started as a trickle in July 2003 - when the European Commission alerted Member States that products contaminated with Sudan I from India had been found in France - is rapidly turning into a river of food product recalls as agencies continue to unearth more contaminated batches.
In January 2004 a European Commission clampdown extended the rules on the illegal red chemical dyes to include curry powder.
Both large and small companies have been implicated in batch of sudan recalls over the past 18 months; although the cost to the industry is difficult to estimate.
"It must have been huge, Sudan red has arguably been the single biggest crisis that the food industry has faced during this year," says Chris Smart at the UK's Reading Scientific Services Limited (RSSL), which has developed a method for detecting the four types of sudan red dyes.
He points out that the biggest surprise about the number of companies having to recall products "is that routine testing should be able to pick up the problem in ingredient supplies before the products are even made".
"It is definitely one of those occasions where a little bit of routine testing could have saved an awful lot of money and embarrassment for a great many food producers," he added.
According to the Indian Spice board, an estimated 500,000 tonnes of spices and herbs valued at €1.2 billion are traded each year around the globe - of which 46 per cent is supplied by India.
The board, which regulates all exports, says it has the Sudan situation under control and four companies whose products fell foul of the testing procedures for the potential carcinogen have had their licences revoked.
It appears that Premier Foods received the chilli powder that was the source of the contamination before July 2003, when regulations required that food be tested for the substance.
Because of this, the firm may escape a fine from the Food Standards Agency.
The UK's food industry body, the Food and Drink Federation, said it was working closely with the FSA, retailers and other trade associations to ensure that any remaining affected foods are "speedily removed from sale".