According to European Union officials the deadly H5N1 strain of avian flu has been detected in poultry in northern Cyprus.
The outbreak in Cyprus more or less confirms that the virus, previously found mainly in Asia, has spread west and is now infecting the bird population of Europe.
Nearby Turkey has already reported 21 human cases of bird flu including four deaths.
The EU statement says that the Turkish authorities have been informed of the outbreak which is in an area not under the effective control of the government of Cyprus.
The EU has banned the import of live animals or animal products from the Turkish Cypriot enclave into the EU, and is apparently sending two experts to the area to investigate.
The EU has offered assistance with surveillance if needed, while the Cypriot authorities have taken all necessary measures including keeping poultry indoors.
An EU laboratory has confirmed the virus in one of two samples from northern Cyprus provided by Ankara, but the EU is not expected to impose any further emergency measures at this stage.
According to spokeswoman Barbara Helfferich, they are confident that the measures taken so far are holding and they hope to be have more details later.
Ferdi Sabit Soyer, the prime minister of North Cyprus, says that all the poultry in an area within a three kilometre (1.5 mile) radius around the village of Incirli, where the two samples were taken last week, had been culled.
Soyer says the radius has now been extended to 10 km (six miles), and they are checking all people and cars going in and out of the area to make sure no birds are transported.
He has called on all Greek Cypriots to co-operate to prevent the spread of the disease, and says at present no humans were affected by the disease.
The government is due to meet EU experts and is prepared to implement any suggestions.
Agriculture Minister Timis Efthymiou says at present there is no decision to close any of the crossing points and no additional restrictions have been placed by the EU than are already in force.
Bird flu has killed at least 83 people since it re-emerged in Asia in late 2003, according to the World Health Organisation.
The virus remains predominantly a bird virus which is caught by humans through close contact with infected birds, but many experts fear the virus may mutate to enable it to spread easily among humans, triggering a pandemic that could cause millions of deaths.
Last week the European Union extended a ban on imports of captive live birds from outside the EU area for a further four months to guard against the spread of bird flu.