The standstill was revealed after the Food Standards Agency (FSA) announced horses processed for meat at a plant near Taunton, Somerset, contained a painkilling drug that could have entered the human food chain in France.
The food safety watchdog said it had found the carcasses of six horses contaminated with phenylbutazone – or "bute".
Bristol-based LJ Potter, which rents the abattoir in Staplegrove on the outskirts of Taunton, said it had recalled meat sent across the Channel and stopped processing until the FSA introduces tests before meat is dispatched.
"We will not process horses again until these measures are in place," a statement read.
The firm, which slaughtered 3,301 horses last year, principally for export to France, Belgium and Italy, blamed lax UK and EU regulations for the growing horsemeat scandal.
The Westcountry abattoir is one of just five facilities in the UK that slaughters horses for meat to be sold abroad.
Bute was detected in eight horses out of 206 tested by the FSA in the first week of this month. Two were intercepted and destroyed at another plant before leaving the slaughterhouse, but the other six at Taunton were sent to France.
Officials sought to allay fears the drug was a danger to human health. Chief Medical Officer Dame Sally Davies said that although bute was linked to side-effects in patients who have been taking it as a medicine for arthritis, the risk was very low.
"If you ate 100% horse burgers of 250g, you would have to eat, in one day, more than 500 or 600 to get to a human dose," she said.
Vets and horse owners have to sign horse passports if an animal is treated with bute, to ensure it is not subsequently sold on for human consumption.
But LJ Potter said it had long warned the Department for Environment, Food and Rural Affairs (Defra) the horse passport "would not ensure public health" – arguing the regulations are "wholly inappropriate to the control of equines permitted to enter the food chain".
The firm – which rents the abattoir once a week from Devon butcher Stillman's, which has no involvement with horsemeat – said prior to the 2005 passport regulations it had gone more than 20 years without a positive result for bute.
It added: "We wish to produce meat that is wholesome, nutritious, good value and, most importantly, safe. The current EU regulations have been proved, beyond all doubt, to be ineffective in permitting us to do this." It went on to blame the scandal of horsemeat being sold as beef on "ignorant, mis-informed, badly drafted EU legislation".
Of the positive FSA bute tests, the firm has "already taken steps to recall meat delivered to France in order to protect our French customers". It added the abattoir has "not processed horses this week to permit the FSA to put in place a test that is able to provide results prior to meat being dispatched".
It continued: "We believe that this interim measure will ensure public safety."
Meanwhile, three men were arrested last night by officers investigating the horsemeat scandal. The men were arrested at plants in Aberystwyth and West Yorkshire, which were inspected on Tuesday by the FSA.
