Hundreds of bottles of imitation Jacob's Creek, which have made their way into bottle shops across the country, have already been seized.
The wine appears identical to the real thing, apart from a tell-tale misspelling of "Australia" on the label - it is spelt "Austrlia".
Trading standards officials are warning consumers to look for the error when buying a bottle of one of the UK's favourite wines, as well as another sign: apparently it tastes terrible.
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Pernod Ricard UK, owner of Jacob's Creek, launched an investigation after receiving a growing number of complaints from customers about the quality of the wine they had bought.
Deputy managing director of wine for Pernod Ricard Simon Thomas said: "This counterfeit product is of very low quality and substandard taste.
"Tests indicate the content is not harmful but anyone with doubts concerning the authenticity should not consume it."
Hundreds of imitations have already been seized in London, Surrey, Reading and Cardiff.
The fake wine, which normally sells for STG10 ($A15) a bottle, is believed to be from China and is being sold to bottle shops and independent shops for as little as STG2 ($A3).
Colin Houston, head of food fraud and incidents at the Food Standards Agency (FSA), said: "Consumers need to be vigilant and should check closely for spelling mistakes.
"The FSA takes the issue of food and drink fraud very seriously and is working closely with local trading standards officers and the brand owner to stop the unlawful selling of this wine."
