More than £100,000 worth of tobacco a month is smuggled into Liverpool
Organised gangs are selling illegal cigarettes in Liverpool which contain arsenic, fibre glass and rat droppings, trading standards said.
Officials say they are being sold in pubs, newsagents and outside football matches by gangs who are also linked with people trafficking.
The public are warned not to buy them as they contain 60% more tar, 80% more nicotine and 130% more carbon monoxide.
A new dedicated unit is being set up to tackle trade in counterfeit goods.
It will include police officers, revenue and customs officials and trading standards staff.
Officials believe the trade is about "more than cheap cigarettes" because it is closely linked to organised crime.
'Organised crime'
John McHale, Principal Tobacco Control Enforcement Officer, said: "We believe this will help with intelligence sharing, and mean that our efforts can be even more effective.
"The reasons we are so concerned about the trade is that it funds organised crime, with the Triads in Liverpool and Manchester heavily involved.
"People are also being trafficked into this country to be exploited. The tobacco products themselves contain substances which make them even more of a health risk than normal cigarettes.
"This is doubly worrying, as many of the cigarettes end up being sold in areas where health is already poor."
Trading standards say 70% of tobacco products seized at UK ports are counterfeit and 12% of tobacco products on the UK official retail market are fake.
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