Members of the public have been urged to book for further testing after 43,000 PCR tests at government-run sites resulted in false negatives.
NHS Test and Trace have suspended testing operations provided by Immensa Health Clinic Ltd at its laboratory in Wolverhampton, following an investigation into reports of people receiving negative PCR test results after they have previously tested positive using lateral flow tests.
The majority of those affected appear to be from the south west of England, but people in Wales and the south east are also understood to be impacted.
An investigation led by the UK Health Security Agency (UKHSA) is underway attempting to confirm the cause of the problem, but early indications predict that more than 10 per cent of the 400,000 samples processed by the lab could be wrong.
The agency estimated 43,000 people may have been given incorrect negative PCR test results between Sep 8 and Oct 12.
A spokesman said: "This is an isolated incident attributed to one laboratory but all samples are now being redirected to other laboratories."
NHS Test and Trace is now contacting the people that could still be infectious to advise them to take another test.
Close contacts who are symptomatic will also be advised to take a test in line with normal practice.
Dr Will Welfare, Public Health Incident Director, UKHSA: "We have recently seen a rising number of positive LFD results subsequently testing negative on PCR.
"As a result of our investigation, we are working with NHS Test and Trace and the company to determine the laboratory technical issues which have led to inaccurate PCR results being issued to people.
"We have immediately suspended testing at this laboratory while we continue the investigation."
A video in January as a result of a Sun investigation purported to show workers at the lab scuffling inside the West Midlands base.
Immensa and its Italian owners Dante did not comment at the time, and it is not clear if any action was taken.
Andrea Riposati, CEO of Immensa Health Clinic Ltd, said: "We are fully collaborating with UKHSA on this matter. Quality is paramount for us.
"We have proudly analyzed more than 2.5million samples for NHS Test and Trace, working closely with the great teams at DHSC and UKHSA.
"We do not wish this matter or anything else to tarnish the amazing work done by the UK in this pandemic."
Newbury mass-testing site among bases hit
It comes as West Berkshire Council said in a statement some of the tests at the Newbury Showground testing site, operated by the Department for Health and Social Care (DHSC), "have had results sent out that may have incorrectly shown as negative for Covid-19".
"After receiving reports from local residents in recent weeks that there were concerns about the accuracy of test results from the site, we passed these concerns onto the DHSC for further investigation," the statement added.
"The DHSC has now confirmed that a number of sites nationally may have been affected by this issue, including the one at Newbury Showground."
Those who received a negative result for a PCR test between Oct 3 and 12, as well as their close contacts, were "strongly" encouraged by the local authority to take another test.
Councillor Graham Bridgman said: "Testing continues to remain important as we learn to live with Covid and anyone who has symptoms, or who has been in contact with someone who tests positive, should book a PCR test straightaway. We also strongly encourage the public to do twice weekly lateral flow testing.
4,000 people in Wales may have been given inaccurate results
Around 4,000 people in Wales may have been given inaccurate Covid test results after "technical issues" at a laboratory in England, the Welsh Government has warned.
The majority of faulty Welsh results will have been given between September 8 and October 12 and were from testing sites in the Gwent and Cwm Taf Morgannwg areas.
Welsh health minister Eluned Morgan confirmed the issue is isolated to one lab and does not involve the wider network, including the one in Newport which is responsible for processing the majority of Welsh samples.
Baroness Morgan said: "My immediate concern is the information and support for the Welsh residents impacted and I have asked Public Health Wales to provide additional support and advice to the affected health boards in addition to the UKHSA communications.
"They will also be assessing the potential impact of this incident on the case rates and epidemiology reports for Wales.
"We will continue to work closely with UKHSA and NHS Test and Trace on the findings and actions needed and I will keep members informed on developments."
Concerns were raised when people had positive lateral flow tests, but negative PCR results from the lab.
The Welsh Government said it was made aware last week that the UKHSA had begun an investigation, prompting Public Health Wales to review cases highlighted by health boards in South Wales.
Should I be getting another test?
Anyone who had a test from October 4 and received a result from the affected laboratory will be contacted by NHS Test and Trace by text message and/or e-mail and advised if it was negative to book an appointment to be re-tested.
It will also advise that their close contacts who are symptomatic should book a test.
People who had a test processed at the laboratory between September 8 and October 4 will also be contacted and advised to get a test if they have symptoms.
Those who have symptoms should self-isolate immediately and book a PCR test, the Government said.