Some victims of human traffickers could be given an automatic right to stay in the UK under plans to tackle the trade.
Many women trafficked to the UK are forced to work as prostitutes
Support schemes are also being considered in public consultation by the Home Office and Scottish Executive.
Ministers are looking at joining a European agreement that provides illegal immigrants forced into the sex trade with residence permits.
The economic and social cost of the trade in 2003 was about £1bn, Home Office research suggests.
The public consultation comes in the wake of several high-profile trafficking trials and investigations and focuses on trade in children and adults for sexual and labour purposes.
Currently, when trafficking victims are discovered, their fates are decided on an individual basis and they do not have a right to remain in the UK.
There has been pressure on the government to sign the European Convention on Action Against Trafficking in Human Beings.
The convention says temporary residence permits must be given to victims endangered by return to their home countries and to those who assist with prosecutions.
It also gives victims permission to stay temporarily while they decide whether to help prosecute traffickers, by offering an automatic a "reflection period".
The consultation would not formally be seeking views on the convention but would look at the issue of residence permits and reflection periods.
Home Office Minister Paul Goggins told the BBC the government was worried about a potential loophole in such measures.
"People will claim to be victims of human trafficking when they're not, they'll use it as a way of extending time here," he said.
"We've been very clear over recent months and years to differentiate between those people who genuinely seek asylum and those people who come here for other purposes, we don't want to undermine that."
Home Secretary Charles Clarke told BBC Radio 4's Today programme the government had not signed the treaty yet because it was not sufficiently comprehensive.
But he said: "We do anticipate that in the coming months we will be in a position to sign and then ratify the convention."
Mr Clarke compared trafficking to drug smuggling.
"They are international in character, they are run by international criminal conspiracies and they operate in the most cynical and unpleasant way."
Other proposals in the consultation include mounting awareness campaigns in source countries, giving police and immigration officials more training to help spot signs of people trafficking, and tightening entry requirements for foreign minors.
Debbie Ariyo says the government needs to reach out to communities
Tougher penalties for those who knowingly employ illegal migrant worker are also being considered.
The Home Office would look at running similar schemes to the London-based Poppy Project pilot, designed to help victims of sex trafficking.
The consultation, which runs until April, has been welcomed by some campaigners.
Mike Kaye, of Anti-Slavery International, however, said he hoped the government would sign the convention.
"What we are concerned about is the level of protection and support to people who have been victims of trafficking", he said.
Debbie Ariyo, of Afruca, which tackles the trafficking of African children into the UK, urged the government to get views from all communities affected by trafficking.
"You have young people being trafficked from a wide range of countries - east European, Chinese, Vietnamese, African - and the government needs to reach out to all those people," she said.