The United Nations organisation for children, Unicef, has produced a damning report on child prostitution on the German-Czech border.
Child "bazaars" exist along Czech-German border, report says
Unicef calls the region a haven for paedophilia, saying that some children were being sold into sex slavery by their own families.
Tens of thousands of Germans cross the border to abuse the children, officials say.
Children as young as eight have been seen negotiating over sex practices and prices - and some are paid only in sweets, according to the report's author.
The head of Unicef in Germany, Reinhard Schlagintweit, said the German and Czech governments had failed to combat child exploitation and had turned a blind eye to the problem.
A German police psychologist described the border as the biggest brothel in Europe.
"The Czech Republic is becoming a discount market for sex with children," said Adolf Gallwitz, saying paedophilia in the area was "increasing at an incredible rate".
The report said children were brought to the area from across the Czech Republic and other central and eastern European countries.
The abusers are mostly German sex tourists and paedophiles, who pay for access to the children.
"It is shocking that children right in our backyard are being mistreated unscrupulously," said Unicef patron Christina Rau, wife of German President Johannes Rau.
"We must do everything to help the victims and protect other children from these crimes."
About 100,000 German sex tourists travel to the Czech Republic, Mr Gallwitz estimated - half of them paedophiles.
The author of the report, Cathrin Schauer from regional aid project Karo, said bus stops, petrol stations and rest areas near the border had been converted into "bazaars" where child prostitutes were bought and sold.
"In some districts, they wait in cars or apartment windows.
Women with small children in their arms look out for sex tourists
and hand the children over into cars," the study said.
Some children are sold by their impoverished families
The victims were often driven to prostitution by desperate poverty, Ms Schauer said. Those receiving cash were paid between five and 25 euros by each customer.
Some suffered violence at the hands of their abusers.
Austrians and Italians had been seen taking part in the abuse, although most were from the nearby German states of Bavaria and Saxony.
The report was co-produced with child campaign group Ecpat, which works to eliminate child prostitution.