The Food Standards Agency (FSA) said it had been notified that a cow born before 1 August 1996 had been slaughtered on 19 October 2006 and the meat had been sold through a local bucher in Newport.
Under UK regulations meat from cattle born or reared in the UK before 1 August 1996 cannot be placed on the market.
The incident is the fourth to occur since safety measures were put in place and highlights the continuing problems the FSA is having in ensuring that its BSE regulations are watertight.
The EU relaxed restrictions on the sale of UK meat to the continent last year on condition that stringent BSE controls were maintained.
In the case of the current incident the FSA said the error was not discovered until 12 December. DNA tests confirmed the mistake on 16 January 2007.
The FSA believes the cow was misidentified as one born in May 1997 at a farm in Powys. The animal was sent from the farm to Ensor's Abattoir, which is based in Gloucestershire and is licenced to slaughter cattle over thirty months old for human consumption.
The meat from the cow was delivered on 6 November to Jim Oliver, a butcher's shop in Newport.
Although the cow was slaughtered on 19 October 2006, the possible identification error was not discovered until 12 December. The FSA said it is still investigating the incident.
The UK's laws requires that cows over thirty-months-old must be tested for BSE before being slaughtered.
The regulations also require slaughterhouses to remove specific risk material from the animals.
The FSA said the cow in question had these parts removed and these did not enter the food chain.
Therefore, any risk to human health from consuming products derived from the heifer is extremely low, claims the FSA.
Since the BSE testing regime came into force in November 2005, about 400,000 cattle over thirty-months-old have been slaughtered in the UK for human consumption, according to the FSA.
The UK has been allowed to ship beef to the rest of the EU market since the bloc lifted a 10-year-old ban earlier in 2006. However, only live cattle born after 1 August 1996 can be exported, along with beef from cattle slaughtered after 15 June 2005. The EU has maintained a ban on UK for beef containing vertebral material and for beef sold on the bone.
The ban was lifted as cases of BSE dropped in the UK. Before the BSE crisis in 1986, the UK's beef exports were worth about £1bn (€1.5bn) compared to £20m (€29m) in 2004, according to Food from Britain, a consultancy.
The ban on the export of UK beef was issued in March 1996, due to the high incidence of BSE cases in the UK at the time.