The entertainment industry has been threatened with possible law changes if it does not tackle the problem of ticket touting by next summer.
Promoters say touts have damaged confidence in the industry
Culture Secretary Tessa Jowell said "targeted action and changes in legislation" could be considered to stop exploitation of "genuine fans".
Ms Jowell also announced an action plan after talks with industry leaders.
This includes allowing people to return tickets and the setting up of a website to allow exchanges at face value.
"The innocent victim of ticket touting is the fan who has to pay through the nose for a vastly overpriced ticket to see their sporting, stage or musical hero," said Ms Jowell.
"These are the people we must protect."
After the minister's third meeting with industry figures on the issue, she said "good progress" was being made.
The action plan includes the following:
- An industry agreement to introduce a policy allowing the return of tickets at face value to original seller
- The Concert Promoters Association to set up a website allowing fans to exchange tickets at face value
- Development of a kite mark system for ticket sales websites
- The drawing up of a code of practice for primary and secondary ticket sellers
"The industry should consider itself on notice," said Ms Jowell.
"If it hasn't come up with a workable solution to stamping out the most unscrupulous touts by next summer, where there is clear evidence it's needed, we may consider targeted action and changes in legislation to ensure genuine fans are protected from exploitation."
Auction website eBay has blamed promoters and organisers for helping create a secondary market for tickets, pointing to "the shambolic way they distribute tickets through jammed phone lines and crashing websites".
They needed to take "a hard look at the way that they allocate tickets to sponsors and agencies, and at the way they price tickets to fill the house and maximise merchandise sales", said eBay's Richard Ambrose.
Some ticket agencies, venues and promoters want touting banned on websites like eBay.
Mr Ambrose said that 90% of ticket sales on the site in the last year had been people selling five or fewer tickets.
"The vast majority of people selling online are selling for personal reasons, normally because they cannot attend an event," he said.
Stuart Galbraith, managing director of events company Live Nation, said eBay was "actually allowing people to buy tickets that they have no intention of using whatsoever, and making it more difficult for people who want to buy face value tickets in the first place".
"There are numerous examples of shows on eBay where people are being sold tickets when there are actually legitimate tickets, very available, in the marketplace at face value.
"And they are actually making people pay more then they should be."
Mr Galbraith, who is also a member of the Concert Promoters Association, added: "The secondary market will always exist.
"What we are looking to do though is to stop the enormous proliferation that has come about, with the advent of the internet, of people that are buying tickets purely and simply with a view to making profits out of genuine concert-goers."
The government has no plans to make touting illegal but is looking to identify ways of making it unattractive for touts to operate.