The company was scheduled to supply one in every six flu vaccines for this year's immunisation campaign in the UK, but had its manufacturing licence withdrawn yesterday.
The suspension could lead to shortages in other countries and add to an existing shortage in flu vaccines caused by an undersupply of last season.
The UK Medicines and Health products Regulatory Agency (MHRA) said it had suspended Chiron's licence for three months with immediate effect, citing manufacturing problems.
The move had been anticipated for some time after product sterility problems were uncovered in some batches of FluVirin vaccine made at company's Liverpool-based manufacturing plant.
The UK Department of Health said contingency measures were in place, and stressed that while there might be some short-term delays in some clinics, the programme aimed at immunising the elderly and other vulnerable groups would not be derailed.
Alternative arrangements are being made to secure supplies of flu vaccine in order to deliver this year's immunisation programme.
Chiron announced in August, that lots containing 4 million flu vaccines made in Liverpool were contaminated. Following tests on the vaccines, the company said they did not meet product sterility specifications and it had delayed shipment to the US until October.
The company had halted production while it explored the cause of the contamination, which has been traced to human error. All 50 million doses of the vaccine due to be shipped from the plant are affected by the blockade.
The UK is also preventing exports of the affected vaccine, prompting fears that shortages could overspill into other countries, and notably the US where Chiron supplies around half the market of 100 million doses. The other major supplier is Sanofi Aventis.