Councils have issued a stark warning about the high levels of illicit tobacco being sold in shops and streets across England and Wales.

Efforts to reduce smoking are being “undermined by millions of cheap, illegal cigarettes containing up to 500% higher levels of cancer-causing chemicals flooding the black market,” the Local Government Association (LGA) has warned.

“Millions of illegal cigarettes, worth hundreds of thousands of pounds, are regularly seized by councils,” according to the LGA, which represents 350 English and 22 Welsh councils.

Trading standards officers have found illegal stashes of cigarettes hidden under floorboards, in toilet cisterns, in boxes of sweets, behind extractor fans and ceiling lights, and beneath a motorised lift, it added.

Last month a retailer from Dewsbury, West Yorkshire, was jailed for 15 months after officers seized more than 159,000 illicit cigarettes and 650 packs of tobacco in his store. It was the first custodial sentence by West Yorkshire Trading Standards for such an offence.

Cllr Simon Blackburn, chair of the LGA’s safer and stronger communities board, said: “Illegal tobacco being sold cheaply through the black market by rogue traders is funding organised criminal gangs, damaging legitimate traders and robbing the tax payer of more than £2bn that could be spent on schools, hospitals and caring for the elderly.

“Aside from the content being unregulated and dangerous, fake cigarettes fail to extinguish themselves when left to burn, presenting a real danger to people.

“Children and young smokers can often be targeted by people who sell illegal cigarettes, making it even easier for them to get hooked on smoking.

“Any shopkeeper thinking of selling illegal tobacco should think again. Trading standards teams at councils nationwide will continue to carry out enforcement exercises that target rogue traders and help to protect the health of children and young people.”

The Scottish Grocers Federation (SGF) welcomed the LGA statement and called for the Scottish equivalent, CoSLA, to publish a benchmark for the scale of the problem in Scotland.

The SGF is concerned that the Scottish illicit tobacco trade will “show a marked increase” following the implementation of plain packaging which is scheduled to be enforced for manufacturers later this week.

SGF chief executive Pete Cheema said: “We urgently need an accurate benchmark for the scale of the problem in Scotland so that we can effectively chart any increase in illicit trade linked to plain packaging. It would be extremely useful if CoSLA would undertake this work with local trading standards. We need to understand any effect plan packs are having if we are to develop effective solutions to this problem in Scotland.”