Urgent tests were being carried out to determine whether cattle on a farm near Guildford, south of London, had caught the disease after initial tests proved "inconclusive", the environment ministry said.
Britain's chief vet Debby Reynolds told a news conference: "The level of suspicion (about the disease being present) is low. The temporary control zone (placed around the farm) reduces the risk of spread.
"The laboratory test results will guide our decision."
The farmer at the centre of the latest suspicion, Laurence Matthews, said he was convinced the infection affecting calves on his farm about 10 miles (16 kilometres) from the first outbreak was not foot and mouth disease.
"The vet is absolutely sure that it's not foot and mouth disease... I didn't think it was but I just wanted to be 100 percent sure," he told reporters.
Britain's farming community has been on high alert for a week since the first case was confirmed a week ago.
A second case was later found on a neighbouring farm, prompting fears of a repeat of the epidemic six years ago that cost Britain an estimated eight billion pounds (11.8 billion euros, 16.3 billion dollars) and saw between 6.5 million and 10 million cattle slaughtered.
But tests on animals killed as a precaution at a nearby third farm, within the protection zone, were negative, the environment ministry said.
The farmer whose livestock were slaughtered in that case, John Emerson, voiced frustration that his cattle had to be culled even though they were not infected.
"We are upset, obviously .. When we first heard the herds next door to ours were infected we thought it was inevitable ours would get it too. But knowing now that my animals were never infected makes it worse," he said.
Meanwhile a ministry spokesman could not say when results were due on those from the Matthew's farm, although reports suggested it could be later Friday.
National Farmers' Union president Peter Kendall said: "The whole farming community is holding its breath for the test results...
"If it is a confirmed case it is obviously going to be a huge worry for the whole industry which had been hoping that the outbreak had been confined to the protection zone near Guildford."
After the first case, the government imposed an immediate ban on the movement of cattle, pigs and sheep which are most susceptible to the disease, as well as no-go areas around the affected farms.
In a move to minimise the impact of the outbreak, Prime Minister Gordon Brown sought to reassure people that the countryside was "open for business" although a European export ban on British animals and animal products remains.
Nearly 600 animals on three farms have been slaughtered -- some as a precaution due to suspected "dangerous contact" with infected beasts -- but if confirmed the new case would be the first outside the restriction zone.
Reynolds, who said vaccination remained an option if the disease spread, said the risk of infection outside the county of Surrey was "very low" and further cases from the original virus were "unlikely".
But she did not rule out secondary infection.
The environment ministry published an interim report Friday on the outbreak, concluding that it was "very likely" the source of the infection came from a nearby laboratory site.
The Pirbright site is shared by the government-run Institute of Animal Health (IAH) and a private vaccines firm Merial Animal Health Limited, both of which have used a strain of virus similar to that in the infected animals.
Meanwhile Scottish authorities, who have more autonomy over animal health policy due to the country's devolution from London, further relaxed restrictions on movements Friday.
The relaxed measures involve easing rules on the movement of pregnant cows, sows and weaned pigs.