The report examined the sex industry in Indonesia, Malaysia, the Philippines and Thailand.
It found that during earlier recessions, many women who lost their jobs had turned to prostitution to support their families.
It recommends that governments officially recognise prostitution so they can better address its economic and social causes and monitor the spread of sexually-transmitted diseases.
Sex boosts economy
It is believed the sex industry accounted for between 2% and 14% of the Gross Domestic Products of the countries surveyed before the slump.
In Thailand, $300m-a-year is sent by prostitutes to their families in poor rural areas.
The ILO warns that the growth of the industry has serious implications for social welfare and human rights in the region.
While the study found that most women chose to enter prostitution, nearly all those asked said they were unhappy.
Many women said they needed to work in the sex industry in order to support parents or children.
Child victims
The ILO singles out child prostitution as especially worrying.
The report says children, unlike adults, do not choose to work in the sex industry and are much more likely to be victims of debt bondage and physical violence.
The report says countries should strive to eliminate child prostitution.
The ILO recommends improving working conditions and social protection for adult prostitutes.
Country profiles
Indonesia rules out Aceh independence
DiCaprio film trial begins
Millennium sect heads for the hills
Uzbekistan voices security concerns
Chinese imports boost US trade gap
(From Business)
ICRC visits twelve Burmese jails
Falintil guerillas challenge East Timor peackeepers
Malaysian candidates named
North Korea expels US 'spy'
Holbrooke to arrive in Indonesia
China warns US over Falun Gong
Thais hand back Cambodian antiques