The government has requested that online auction site eBay remove tickets for BBC Radio 1's Big Weekend event.
More than 500,000 people applied for tickets
The 35,000 free tickets for the two day music festival near Preston were allocated by ballot.
But tickets have appeared on eBay for up to £400 a pair, with some listings detailing how to evade ID checks.
Creative Industries Minister Shaun Woodward said profiteering from the event was unacceptable. EBay said it had noted his comments.
Mr Woodward said:"This flies in the face of all the hard work that Radio One is putting in to stamping out touts at the Big Weekend.
"Ebay should stop selling the tickets - the artists are not making money from this free event, so why should the touts?
"Demand for this event is outstripping supply by more than ten to one, and the BBC has decided that people should get tickets on the basis of how lucky they are, not how much money they have."
A spokesman for eBay said: "The resale of concert tickets is perfectly legal and legitimate and it is eBay's policy to allow this.
"We note the points raised in Shaun Woodward's letter and will respond in due course.
"We remain committed to discussing with the government the many issues surrounding the secondary ticket market."
The Scissor Sisters, Razorlight and Kaiser Chiefs are headlining the concerts, which take place on 19 and 20 May.