Plain tobacco packaging is failing in Australia according to a report which found smoking rates will rise this year for the first time in a decade.

The investigation by auditing firm KPMG found that while sales of legal cigarettes and tobacco have dipped slightly in the past 12 months, there has been a surge in demand for counterfeit and contraband cigarettes which has more than made up the shortfall.

Commissioned by tobacco suppliers, the report was based on analysing consumers’ preferences and ­collecting 12,000 discarded cigarette packets.

According to the findings smokers have been driven to purchase illicit tobacco products which do not display the mandatory health warnings.

There are currently no plans to introduce plain packaging for tobacco in the UK, but in May Ireland announced plans to become the second country in the world to bring in the policy.