"Initial blood tests on clinically healthy sheep on a farm within the protection zone suggest exposure to FMD (foot and mouth disease)," a statement from the Department for Environment, Food and Rural Affairs (DEFRA) said.
"These animals were identified as part of the surveillance work that is being carried out in the area. All animals on the premises are being slaughtered on suspicion. Further laboratory tests are ongoing."
England eased transport restrictions at the weekend imposed after the latest outbreak of the disease was confirmed on Wednesday near Egham, just outside the M25 motorway around London.
The move allowed farmers across Britain to take livestock to slaughter for the first time since the outbreak.
Similar rules in Scotland and Wales had already been eased, while they were never imposed across the North Channel in Northern Ireland.
Little over a week ago the government declared Britain free of foot and mouth following last month's outbreaks, which were blamed on leaks from a research laboratory.
But following the new outbreaks last week, the European Union re-imposed a ban on British meat exports to the bloc's 26 other member states.
The 2007 outbreaks have raised the spectre of a repeat of a 2001 crisis, in which up to 10 million animals were culled and which cost the British economy about eight billion pounds (11.7 billion euros, 16.0 billion dollars).
Foot and mouth is a highly contagious viral disease that affects all cloven-footed animals.
Cattle, sheep, pigs, goats and deer are among the animals which can contract the virus. Foot and mouth disease owes its name to the fact that the lesions it causes are found on the inside of the mouth and on the hooves of animals.
It is rarely passed to humans. The last reported human case of foot and mouth disease in Britain was in 1966.