The red dye, which is banned across the European Union, was contained in a five-ton batch of chilli powder that was used to produce Worcester Sauce by Premier Foods, one of Britain's largest food processing companies.
The FSA said that the Worcester Sauce, a common flavouring in processed foods, had been sold to numerous suppliers in recent weeks, who in turn produce foods for outlets from supermarket chains to convenience stores.
Among the 359 products affected were Birds Eye 400g shepherd pies, five flavours of Pot Noodle and Loyd Grossman sweet and sour sauce sold in 370g and 450g jars.
A batch of mayonnaise used by sandwich bar chain Pret a Manger was also affected.
Asda was the worst-hit of the major supermarket chains, withdrawing 68 contaminated product lines. Waitrose has 54 affected products, Sainsbury's 41, Morrisons 44, and Tesco 38.
Senior officials at the watchdog confirmed that the "very considerable" recall, likely to amount to several million individual packets and jars, was the largest they had dealt with and that further products could be added to the contaminated list.
But the watchdog also underlined the withdrawal was precautionary.
The FSA said the contaminated chilli formed a minor ingredient in the Worcester Sauce, meaning that levels of Sudan I in the subsequently affected foods were almost untraceable.
Dr Jon Bell, the FSA's chief executive, said: "Sudan I could contribute to an increased risk of cancer. However, at the levels present the risk is likely to be very small but it is sensible to avoid eating any more. There is no risk of immediate ill-health. "We are working with the industry to ensure that any remaining affected products are speedily removed."
Sudan I, part of a group of synthetic dyes soluble in oil, is normally found in batches of chilli powder, often imported from the Indian sub-continent.
Since July 2003, all chilli powder imported into the UK has had to be certified as free of the colourant that, until now, has been largely the subject of food recalls for ingredients used in the catering and Indian restaurant industries.
But the widespread contamination caused by the rogue chilli batch, which arrived in Britain prior to the latest checks, will raise questions about the reliability of the monitoring measures.
The contaminated Worcester Sauce was only detected after an unspecified quantity was sold to an Italian manufacturer, which detected the Sudan I in its own tests and alerted the Italian authorities.
Premier Foods said it had received the chilli powder from a "reputable UK source" and obtained "written assurance" that it did not contain Sudan I. In a statement, the Hertfordshire-based company said: "It must be stressed that the product withdrawal is a purely precautionary measure."
It is understood that the company will now be investigated by trading standards officers to determine the source of the contamination.
The major supermarket chains said that all contaminated ranges had already been removed from shelves by yesterday afternoon.
Consumers are being asked to check their cupboards and fridges for suspect products. A list ofaffected products can be found at the website:
