Escherichia coli is a bacteria that normaly inhabits the intestine and without the presence of E.coli in our gut we would be overgrown by harmful bacteria and fungi, because E.coli protect us by populating our intestines and out-competing pathogens.
Canaries have a high incidence of gut flora of many varieties including E.coli.
Without question, E. coli can be a pathogen. But just because a bird is sick and E. coli is cultured does not necessarily implicate the bacterium as the inciting cause of illness.
E.coli can be associated with water, sand, grit, seed, old food, humid areas, dusty spots and wet cages. Bacterial infections also occur in birds that have a poor level of natural resistance or a damaged immune system. Both inhaled and ingested bacterial infections are potentially life threatening when left untreated.
The process of soaking seed, invites the contamination of the seeds with harmful germs. The potential dangers of contamination may outweigh the benefits of using soaked seed, unless stringent hygienic measures are taken during its preparation. Poor soaking technique can be the cause of E.coli related chick deaths.
Eggfood if left too long can also be the cause of E.coli but in my opinion has less danger than soaked seed.
Sulfa-AVS is a medicine for E.coli infections. It is a combination of Sulfadiazine and Trimethoprim and lifts the form of canaries with an E.coli infection but depresses the form of canaries without the infection.
The truth about E. Coli by Darrel K. Styles, DVM. The Schubot Center, Texas A&M University