Officials will immediately begin slaughtering hundreds of thousands of birds in a 3km radius around the poultry farms in the town of Navapur where the confirmed cases were detected, Anees Ahmed, the Maharashtra state minister for animal husbandry, said on Saturday.
"Around 500,000 birds will be killed," he said. "It is confirmed the deaths were caused by the H5N1strain."
Tests on the birds were carried out by the High Security Animal Disease Laboratory in the central Indian city of Bhopal.
Meanwhile, a scientist said an unknown number of people in the area near the outbreak were reported to be suffering from flu and fever, though there was no immediate indication they had contracted bird flu.
Milind Gore, the deputy director of the National Institute of Virology in Pune, which is approved by the World Health Organisation, said scientists there will begin testing samples on Sunday given by people suffering from flu-like symptoms.
"Around 500,000 birds will be killed. It is confirmed the deaths were caused by the H5N1strain"
Maharashtra state minister for animal husbandry
At least 30,000 chickens have died in Navapur, a major poultry-farming region in Maharashtra state, over the past two weeks, Ahmed said.
The state government was sending a team of 200 veterinarians and assistants to the area, more than 400km northeast of Bombay.
"We have not decided on whether to evacuate people from the area," he said.
Police have cordoned off the area around the poultry farms and construction equipment will be used to bury the killed poultry, Ahmed said.
"Nobody is being allowed to enter the area. People are being stopped in a 10km radius,"said Ahmed.
In New Delhi, the federal health ministry said that as well as culling birds, poultry within five to seven kilometres of the outbreak would be vaccinated against bird flu.
"All attempts are being made to ensure the infection does not spread," the ministry said in a statement, adding that people should not panic as the situation is "under control".
Bird flu has killed 91 people,
mostly in Asia, since 2003
Bird flu has killed 91 people since 2003, with the bulk of the victims in Asia, but recent deaths reported in Iraq and Turkey, according to the WHO. Most of the human cases of bird flu have been through direct contact with sick birds, it says.
Scientists fear the highly pathogenic H5N1 virus could mutate into a form that passes easily between humans and spark a human flu pandemic.
Indian pharmaceutical company Cipla Ltd said on Saturday that a generic version of the drug Tamiflu - thought to be the best prevention against a pandemic - will be available in chemists across the country early next week.
"The drug will be available for customers by Wednesday," Dr Yusuf K Hamied, Cipla's chairman, said. "We are geared up to produce 100,000 doses per week."