Illicit tobacco accounts for 15% of all tobacco sales in Wales, the first ever research project conducted across all 22 local authority areas has revealed.
The study, led by ASH, also revealed that one quarter of current smokers buy illicit tobacco on a regular basis and that it makes up 42% of their total tobacco consumption.
More than 70% of people who buy illicit tobacco said that it made it possible for them to smoke when they could not otherwise afford to.
The average price paid for a pack of 20 illicit cigarettes is £4, compared with around £8 for a pack of legally-purchased cigarettes.
The most widely-used channel for purchases is at private addresses with 52% of people buying from here. More than 45% of sales are made in pubs and clubs followed by shops at 19% and street sellers at 16%.
ASH Wales is calling for strengthened partnerships between enforcement agencies to ensure that information and intelligence is shared and used effectively.