The European commission, which had previously threatened a trade ban unless Rome acted more aggressively, said it was satisfied with Italy's latest effort to contain the scare.

'Limited phenomenon'
 
Massimo D'Alema, Italy's foreign minister, played down the health risks even as he announced the recall affecting an industry which employs 20,000 people and is worth about $475m a year.

"We are at
the historical minimum level of sales. Scares have hit cows, then fish with mercury, then chicken ... Now, it's our turn"


Paolo Micocci, mozzarella dealer
"This is a limited phenomenon and once the [recall] measures are completed, we're convinced that we can restore confidence in the quality of a product that remains a symbol of Italian gastronomy," he said.

Italian health officials believe the dioxin is linked to a recent refuse crisis in Naples and the surrounding Campania region.

With dumps in the area full, locals burned piles of rubbish in the streets and in open fields.

Health officials say industrial waste was also set ablaze, spreading fumes that in some cases contained dioxin, a toxic chemical.

The bad publicity has made some Italian consumers wary.

One mozzarella dealer in Rome, comparing the mozzarella scare to panic over mad cow disease and bird flu, said sales to hotels and restaurants had fallen by half.

"We are at the historical minimum level of sales. Scares have hit cows, then fish with mercury, then chicken ... Now, it's our turn. We'll hang in there," Paolo Micocci said.

'Constant monitoring' 

In Brussels, the commission said that Italy had also pledged to carry out "constant monitoring" of production sites to ensure no further cases of mozzarella cheese were found with dioxin levels exceeding the EU's maximum permitted levels.

Nina Papadoulaki, the commission health spokeswoman, said: "Taking into account the information that was given today, there is no reason at this stage to take further action at EU level." 

Italy produces about 33,000 tonnes of
buffalo mozzarella a year [EPA]
Italy produces about 33,000 tonnes of buffalo mozzarella a year, with 16 per cent of it sold abroad, mostly in the European Union.

France and Germany are the largest importers but sales have been expanding to other countries, including Japan and Russia.

France ordered its shops on Friday to stop selling all mozzarella cheese from Italy's Campania region, saying it was "as a precautionary measure" pending further tests.

But German authorities said no such move was necessary since Italian authorities had assured them that none of the affected mozzarella from Campania was exported to EU countries.

Coldiretti, Italy's biggest farmers' group, criticised France, saying the health scare was based on emotion, not science.

"France's reaction is emotional. It follows the wave of emotional reactions in Japan and Korea," Rolando Manfredini, food safety expert at Coldiretti, said.