The BBC's Tim Samuels: "Some staggering results have emerged"

And one in 20 of the notes show levels high enough to indicate they have been handled by dealers or used to snort the drug.

The study was carried out by Mass Spec Analytical (MSA), based in Bristol, using notes supplied by the Bank of England's Returned Notes Centre in Loughton in Essex.

It examined more than 500 notes worth £7,750, in all four denominations.

Only four of those tested showed no trace of the white powder.

Lab testing at MSA

It is believed most contamination happens during legitimate financial transactions, when contaminated notes touch those in general circulation.

But MSA said that with at least 4% of the notes, the machine gave a massive reading which showed they had been in close contact with the drug.

Spokesman Joe Reevy said: "Once you've taken a snort, the compounds will be in the oils of your skin and they'll get transferred to the notes you handle. That's the main way in which the cocaine gets onto the notes.

"When you test notes that have been used directly to snort cocaine, you get a great big reading and the machine takes quite a while to settle down. You don't miss the difference."

Drug soaring in popularity

BBC Newsroom South East, which carried out the investigation, also found that the drug has plummeted in price - from £80 a gram to £40 a gram - and soared in popularity.

Some of the notes have been used to snort the drug

"Many drug workers say the scare stories surrounding ecstasy have persuaded users to try cocaine", said the programme.

The London-based Youth Awareness Project, which recruits young former drug users to educate schoolchildren, told the programme it was aware of children as young as 14 trying the drug and carrying it in schools.

A member of the project said: "Money and fashion, that's the image kids have of it, and also power.

"Young cocaine users know if they take cocaine that's a little reputation they've established.