Two men, aged 29 and 32,were stopped leaving a car boot sale near Seaham Hall.

A 34-year-old woman was arrested after police called at a home in Houghton which she shares with one of the men.

Thousands of illegal discs and equipment were seized during the operation in Seaham.

Two houses and a caravan were raided by police and officials who seized counterfeit goods valued at thousands of pounds.

The three suspects were all held under suspicion of conspiracy to defraud the film and music industries, and released on bail.

Detective Constable Steve Chinner said: "This was a massive factory, capable of producing more than 3,000 fakes per day - easily enough to supply the entire Durham counterfeiting network.

'Ripped off'

"While it might be tempting for people to buy CDs and DVDs before they have been released, all they are doing is providing a market for criminals who then reinvest the cash in other illegal ways."

The raids follow a six-month operation involving the British Phonographic Industry, the Federation Against Copyright Theft and Durham Police.

Jim Mawdsley, who runs Generator - the North East's music development agency, said the pirate activity has a huge effect on the local music industry.

"The North East is a real hotbed of musical talent and we invest a lot of time and money in supporting new bands.

"Independent record shops are vital to us as they are really supportive of local talent, but they simply can't stay in business when they're being ripped off by the illegal market traders."