Ian Macdonald, primary industries minister for New South Wales state, said the quarantine would extend for 30 days from the last case of equine flu, and it was likely racing would be shut down for at least two months at Randwick, Sydney's principal race course.

They were the first race horses affected by the virus. Macdonald said there were about 700 race horses trained at Randwick, and the majority are expected to eventually be affected by the highly contagious illness.

"Racing and the Randwick spring carnival will come to a total halt and it has the impact of stopping racing for a considerable period of time," Macdonald said.

Several hundred recreational horses in dozens of locations throughout New South Wales and Queensland states were struck down previously by Australia's first outbreak of the flu, a respiratory disease which affects a horse for two to three weeks with a fever, hacking cough, nasal discharge and tiredness. It is seldom fatal.

Initial estimates put losses to the country's racing industry at up to 1 billion Australian dollars (US$816 million, A597 million). Government officials announced Thursday a A$4 million (US$3.25 million, A2.39 million) fund to provide grants to those affected by the outbreak, including jockeys and track workers.

Racing New South Wales chief executive Peter V'Landys said the industry, first hit by the outbreak last weekend when racing across much of Australia was canceled, was in "turmoil."

"It is more than a disaster, it is a grim, black day," V'Landys said Thursday.

"We have 50,000 participants who are already suffering. One horse transport company has already laid off 50 people. This will have a devastating effect and will cost hundreds of millions of dollars."

V'Landys said the Sydney race meeting postponement _ and it will likely have to be canceled _ will have a significant impact on the Melbourne spring carnival, including the Melbourne Cup, Australia's richest and most prestigious horse race, on Nov. 6 at Flemington.

"It will be felt outside," said V'Landys. "The cream of the horses are based at Randwick and Warwick Farm (in Sydney) ... none of those horses now will be able to compete in Melbourne."

While the positive flu result in Sydney garnered the most attention, 100 people _ 30 of them children _ remained quarantined at Warwick, in Queensland state. Although the flu does not affect humans, the disease can be carried on clothing or footwear.

Those under quarantine at Morgan Park were attending a competition there last weekend when one of the horses came down with the flu. Officials said 80 of the 250 horses have now been affected, and the people under quarantine will have to remain there until 30 days after the last horse is infected.

Temporary buildings have been set up, washing machines sent in, local grocery stores are providing food and counselors are being provided for those distressed by their situation.