While the average worldwide piracy rate for physical recordings is 36%, the IFPI described the internet as "a virtually 100% pirate medium".
The IFPI estimated that sales of pirate CDs and CD-R music discs have risen from 510 million units in 1999 to 640 million units in 2000.
The IFPI report lists China, Russia, Mexico, Brazil and Italy as the top five countries in its priority list in terms of domestic piracy.
Countries in South East Asia and Eastern Europe, particularly Ukraine, top the list of manufacturers and exporters of pirate product.
'Startling'
The increase was driven largely by the availability of cheap CD-R copiers that caused piracy rates to rise in many key music markets, the IFPI said.
IFPI chief executive Jay Berman told BBC News Online: "CD-Rs appeared on our radar in 2000 in a very startling way.
"But there's a difference between the kind of copying that takes place in someone's house, where you make a copy from one that you've purchased - and copying from an MP3 file, or using CD-Rs as a commercial pirate.
"Now commercial pirates, instead of using industrial processes, are using CD copiers.
"A guy puts 50 to 100 CD burners in a garage - and you don't know where it is", said Mr Berman.
The world market for pirated music increased by $100m (£72m) between 1999 and 2000 - and is now worth an estimated $4.2bn (£3bn).
'Pirate medium'
The IFPI estimated that a total of 1.8 billion pirate recordings (CDs and cassettes) were sold in 2000 - meaning that one in every three recordings sold worldwide is an illegal copy.
While the average worldwide piracy rate for physical recordings is 36%, the IFPI described the internet as "a virtually 100% pirate medium".
The record industry has responded to internet piracy with a combination of anti-piracy measures, litigation and new investments in legitmate online outlets in the first half of 2001.
Organised crime
Mr Berman told BBC News Online, "The problem now is, first, that it is almost a totally pirate marketplace; second, there a very, very serious technical issues with delivering a product that you're charging for - you have to guarantee delivery and quality.
"But when these are resolved, we will see the medium open up."
The report also alleged close links between music piracy and organised crime, quoting examples which include a credit card fraud and counterfeit CD ring in the UK.
IFPI's figures suggest that sales of illegal music outnumber the legal music market no less than 21 countries, up from 19 in 1999.
Piracy rates have worsened in particular in Malaysia, Taiwan, Indonesia, Mexico, Spain, Holland, Greece, Czech Republic and Croatia, largely due to proliferating CD-R copying.