The prime minister, with the backing of the Treasury and the support of scientists and ministers, believed that vaccination was the best option at the height of the crisis in April, but came under extreme pressure from parts of the food industry which feared a meltdown of exports.

The Guardian has seen minutes from a secret meeting at Chequers where Mr Blair announced that the government had decided on a limited policy in Cumbria and possibly Devon. The meeting was attended by ministers, leading supermarket and food manufacturing groups, scientific and veterinary advisers, the head of the food standards agency and the permanent secretary.

Mr Blair announced that vaccination was the best option but within days the industry, led by Peter Blackburn, the then chief executive of Nestlé UK, had forced an about turn. The last minute retreat surprised everyone at the meeting, including Lord Haskins, chairman of Northern Foods and now the government's farming guru. The extraordinary events in mid-April raise questions not only about whether the right decision was made, but over the power and influence of big business on government policy.

Mr Blair and his ministers were convinced of the scientific and social need for vaccination as early as March 30 but were unable to persuade the industry and Nestlé to change their minds. When their advanced plan fell apart because of opposition, the ministers chose to blame the farmers for not accepting vaccination and played down the influence the food industry had over their decision.

Mr Blair is known to have been furious with his ministers for failing to get industry support and this is believed to have led to the downfall of the agriculture secretary, Nick Brown. Within days of the plan being dropped, the cabinet office was briefing journalists that he was likely to be replaced and the Ministry of Agriculture, Fisheries and Food would be reformed. He was fired after the election and Maff became the Department for Environment, Food and Rural Affairs.

Mr Blackburn, who is also president of the Food and Drink Federation (FDF), was present at the Chequers meeting with the federation's chief executive, Lady Sylvia Jay, a former civil servant at the Department for International Development and the wife of the British ambassador in Paris, Sir Michael Jay.

Patrick Holden of the Soil Association, who was at the meeting as one of the leading supporters of vaccination, said yesterday: "The industry was on one side of the table, the government on the other. Mr Blair said that he wanted to vaccinate but the National Farmers' Union was telling him that the government could not. He then said 'I want you to hear from the chief vet Jim Scudamore and the chief scientist David King', who made the case for vaccination.

"Mr Blair then asked for the views of the industry and Terry Lee, MD of Tesco, the king of retailers, took the lead and said he would be happy with it. The rest fell into line although there were mutterings from the food producers. Lord Haskins was passionately in favour."

This is confirmed by minutes of the meeting taken by the British Retail Consortium, representing the big supermarket groups. The minutes record that the government was planning a vaccination programme after mass culling had failed to halt the outbreak and public unease at the giant pyres was mounting.

"The prime minister said the government increasingly believed that vaccination of dairy cattle should be introduced in Cumbria, and possibly in Devon," the minutes state. "The preservation of export markets no longer seemed a consideration for the forseeable future. The culling of healthy animals on the scale required in these two areas would require a powerful justification."

Lord Haskins recalled: "I certainly went away thinking that they were going to vaccinate".

The next day the government put together what it thought were the last pieces of its plan. The army was already in possession of up to 500,000 doses and civilian volunteers had been trained to administer them. Professor King went to Cumbria to try to persuade the farmers of the scientific case for vaccination.

Sir John Krebs, the head of the food standards agency, convinced the Consumers' Association to accept that labelling products from vaccinated herds was not necessary. It was widely expected that vaccination would start within days. The government, it is thought, was not too concerned that the farmers were opposed.

Fierce lobbying

However, Mr Blackburn and Lady Jay were fiercely lobbying ministers, civil servants and Mr Brown to drop the plan. The FDF is the "sponsor agency" of Maff and has traditionally had close relations with the department. Mr Blackburn wrote to Mr Blair spelling out strongly his belief that British manufactured food exports, worth up to £8bn a year, would be compromised and would lead to a permanent ban on UK meat and dairy products in many major non-EU markets.

"Export customers naturally choose to buy milk from disease-free countries and it should be noted that these customers could readily be supplied from other countries which are FMD-free. It might be tempting to believe that loss of export business might be temporary; but many of these losses would be permanent," he wrote. Mr Blackburn also met Mr Brown on Easter Monday, April 15, where he refused to change Nestlé's position or that of the FDF.

Mr Blackburn, who retired from Nestlé in June, said yesterday that he had put the case for the industry but had been concerned about the future of the Nestlé factory at Dalston, Cumbria, which employs 500 people. The plant is Nestle's major producer of powdered milk with 75% of its output going to developing countries.

A vaccination policy, said Mr Blackburn, could have risked its exports of powdered milk to developing countries and even threatened its closure. "The government was more than aware that one of the major players [Nestlé] had a factory in the heart of the foot and mouth crisis.

"We argued against a vaccination policy. We were very afraid of the consequences on all meat and dairy exports. If you lose the exports once then there is a risk of it going on to confectionery." Nestlé also exports more than £5m of chocolate which depends on British milk.

Yesterday Lord Haskins said that the NFU, which had also consistently opposed vaccination, had used Nestle's arguments to support its case. "They introduced the Nestlé thinking, such as 'will the British public buy vaccinated meat and milk?' They had no right to do it because the retailers and food manufacturers had already said they would cope."

Faced with such strong opposition, the government plan was shelved and, according to one Whitehall source, the decision was made to blame the farmers for not accepting vaccination. "The government knew that they would not easily win over the farmers, but they encountered far more opposition than they expected from the food industry," he said.