Veterinarians had slaughtered 6,000 more birds on the farm about 25 kilometres (15 miles) south of the national capital, disinfected the cages and declared a five-kilometre (three-mile) surveillance zone, they said.
"The H5N1 strain has been confirmed for this particular farm," said foreign ministry spokesman Yong Chanthalangsy on Friday.
"We have already taken all the measures deemed necessary to eradicate the virus. We have killed over 6,000 poultry on the farm and taken full measures according to the guidelines on bird flu."
The Xaythani district farm, which previously suffered a bird flu outbreak in early 2004, found 155 dead chickens on July 14, and about 2,000 dead birds the following day, said the FAO chief technical advisor on avian influenza in Laos, Ricarda Mondry.
"The farmer informed the ministry of agriculture, and they took samples and they tested them in the National Animal Health Centre laboratory and they were positive here for H5," the doctor said.
Samples were then sent to a Bangkok laboratory, where tests confirmed this week that the chicken had died of the H5N1 strain, she said.
"Now we are investigating in the surrounding area what is happening, whether the infection is coming from the outside, where the source of infections is," Mondry said.
"We are taking samples in a five-kilometre radius, where the movement is restricted now. Public awareness campaigns are being carried out in the villages."
In May this year Laos found the H5N1 virus in a single duck in a backyard farm near the capital Vientiane, but extensive testing in villages in following months had found no further cases.
Veterinarians are now investigating whether the source of the latest outbreak is free-roaming ducks, which can carry and spread the disease without showing symptoms themselves.
Laos has so far reported no human deaths from the virus, which has swept across Asia and beyond in several waves since 2003, but neighbouring Thailand this week reported its 15th human fatality.
The landlocked country of Laos borders Vietnam to the east, Thailand to the west and China to the north, all countries which have suffered large-scale bird flu outbreaks and human deaths in recent years.
