The dwindling population of red squirrels is being threatened by a virus that can kill them within 15 days.
Squirrel pox is being spread by grey squirrels, which are immune to the virus, and it is infecting red squirrels living in Scotland.
Conservationists say the estimated 160,000 population of red squirrels in the UK will almost certainly decline, since it has been noticed the virus was being spread by grey squirrels spreading north from Cumbria. The Moredun Research Institute near Edinburgh discovered the virus after taking blood samples from grey squirrels.
Red squirrels with the virus will suffer skin ulcers, lesions and scabs, with swelling and discharge around the eyes, mouth, feet and genitals. Grey squirrels are seldom harmed by the virus but red squirrels have no immunity and usually die within 15 days.
Scientists say it is the first evidence of squirrel pox virus in southern Scotland and that it has serious implications for the endangered population of red squirrels. Infected animals resemble rabbits with myxomatosis and are sometimes found shivering and lethargic.
Roger Cook, the chief executive of the European Squirrel Initiative, urged people to report any sightings of sick or dead red squirrels
Elly Hamilton, a red squirrel conservation officer from the Scottish Borders, said this was the first convincing case of the pox crossing the border.
She said: "All we know is that the grey squirrels carry it. They are unaffected clinically by it so they act as a reservoir host for the disease. They pass it on to red squirrels, who, once they have caught it, die within two weeks.
She added: "It is believed that where grey squirrels are carrying antibodies to this virus, that they replace red squirrels 20 times faster than they would do normally [when not diseased].
Prior to the introduction of greys to Britain from the United States in 1876, the red squirrel was common and widespread in deciduous and mixed forests
But the greys have proved to be an ecological disaster, and all that now remains of the reds is a relatively small population of 160,000 in the UK, three-quarters of which are confined to Scotland.
A report has identified strategies to help save the reds in Scotland. The paper, commissioned by Scottish Natural Heritage (SNH), highlighted 127 woods in northern and central Scotland as potential priorities for conservation action.
Reds make spherical nests called dreys, made of twigs and lined with leaves on the outside and sphagnum moss or grass on the inside. They build them high in a prominent tree fork in an attempt to keep out of the way of predators, although the strategy is not always successful.
Pine martens are known to kill red squirrels, and buzzards and goshawks also exact their toll. More reds, however, are probably killed by domestic cats, dogs and cars than by any natural predator.
In summer, the species is active for much of the day, picking pine cones. Nibbled cones on the forest floor are often the most prominent sign of their presence above.
Red squirrel numbers became so low in the early part of the previous century that they had to be supported with introductions from Scandinavia.