Labour's Shadow Environment Secretary, Mary Creagh, said unwanted horses are being given false paperwork in NI, then sold for €10 and resold to dealers for meat for as much as €500, during a discussion of the crisis on Monday.
She added that there is a "lucrative" trade in the animals, and claimed that while the issue is being linked to Poland, its origins are closer to home.
"The Ulster Society for the Prevention of Cruelty to Animals have clear evidence of an illegal trade of unfit horses from Ireland to the UK for meat, with horses being re-passported to meet demands for horse meat in mainland Europe," Ms Creagh said.
"It says that there are currently 70,000 horses unaccounted for in Northern Ireland. Unwanted horses are being sold for €10 and being sold on for meat for €500 - a lucrative trade.
"It is very convenient to blame the Poles and the Romanians but so far neither country have found any problems with their beef abattoirs."
William McCrea of the DUP said the revelations regarding meat in the UK and Republic of Ireland in recent weeks have "seriously damaged public confidence in the safety of our food".
He said the only way to restore that confidence would be to "find out who has done this illegal activity, put them out of business and bring them before the courts".
Meanwhile the Environment Secretary, Owen Paterson, moved to allay fears over supermarkets selling contaminated meat products.
He said that unless products had been designated as unsafe by the Food Standards Agency, consumers should not worry.
"The advice on food is very, very simple," he said, responding to Ms Creagh.
"I have been completely consistent on this. I have been absolutely clear, the independent agency which gives professional advice is the Food Standards Agency.
"I, you, MPs, and the public should follow their advice - so as long as products are free for sale and they have not been recommended for withdrawal by the Food Standards Agency, they are safe for human consumption."
He added that it appeared "criminal activity" has been at the heart of the scandal.