Cigarettes are up to £2 cheaper in countries like Belgium, from where many smuggling gangs operate to make large profits.
The crackdown, heralded by Chancellor Gordon Brown in Tuesday's Budget, will cost £209m.
Smugglers will face tougher penalties when caught and new technology, including extra X-ray scanners, will also be made available at UK ports and airports.
In his Budget, Mr Brown increased tobacco tax by 5% - a move which manufacturers say will encourage the smuggling of cheap cigarettes.
But he also promised a clampdown on illegal imports.
Intelligence operations
Smuggling alcohol and tobacco - so-called bootlegging - has boomed since the introduction of the Single European Act in 1993.
Cigarettes are up to £2 cheaper in countries like Belgium, from where many smuggling gangs operate to make large profits.
The Act allows UK consumers to buy such goods in other EU states without incurring import duty.
The government has pledged to halt the rise in tobacco smuggling within three years.
The strategy also aims to increase the number of seizures along the smuggling supply chain and improve intelligence operations to smash organised gangs.
Paymaster General Dawn Primarolo said: "These gangs are not 'Jack the lad' individuals who are just smuggling a few cigarettes across the Channel for them or their friends.
"This is an issue of criminality, with hardened gangs of criminals who do not care who they sell the cigarettes to and are using the profits to fund more criminal activity in this country."
'Preventable deaths'
About two in three offenders caught smuggling cigarettes through the port of Dover already have criminal convictions for offences ranging from fraud to drug smuggling and violence, she said.
Ms Primarolo added: "Tobacco smuggling is unacceptable - it undermines our aims to reduce smoking, which is the single greatest cause of preventable premature death in this country.
"It denies honest taxpayers the money for high quality public services and it has disturbing links to other serious criminal activities."
Experts estimate that up to one in five cigarettes smoked in the UK is smuggled.