Britain has become the biggest market in Europe for smuggled tobacco with one in three cigarettes now illegal. The UK is the "main target country for cigarette smuggling activities," according to a confidential report leaked to the BBC Money Programme.

The report, from the World Customs Organisation, also reveals that up to 40 per cent of smuggled packets are supplied by the Italian Mafia. The news comes as a survey published by Mintel this week reveals that the number of people smoking in the UK has risen for the first time in 30 years.

Health campaigners fear that, as street prices tumble, more people will smoke more cigarettes. Smokers can save up to �2 per pack by buying tax free contraband.

Clive Bates, director of anti-smoking group ASH, told the Money Programme: "If we continue to lose to the smugglers, people will die. People will become addicted and they will die." The WCO report shows that Regal cigarettes, manufactured by the UK's Imperial Tobacco, are the brand most seized by customs across Europe. Astonishingly, Imperial, one the UK's biggest tobacco companies, admits: "Whatever is going on, it's important that our brands are not excluded from it."

Most smuggled cigarettes are manufactured in England, exported and then find their way back through a complex chain of supply.

The report also reveals that 40 per cent of contraband cigarettes packs to reach the UK did so via Greece and Italy, where the trade is dominated by a branch of the Italian Mafia.

Anti-Mafia prosecutor Michele Emiliano said on the programme that profits from tobacco were used by the mob to fund gun running, drug smuggling and illegal immigration.

UK cigarettes are the most expensive in Europe

Paul Sadler, Imperial Tobacco manager of external affairs, blamed high UK taxes for the trade. He said: "Cigarettes in the UK are the most expensive anywhere in Europe and as a result criminals target British products and bring them back to the UK to sell on the black market."

Mr Sadler also insisted that the company disapproved of smuggling , but expressed fears that Imperial brands would be ousted by foreign makes in the smuggled market. "We do not want only foreign brands to be imported into the UK. Whatever is going on it is important that our brands are not excluded from it."