The study by KPMG found that the growth in total consumption illicit tobacco has risen from 11.8% in 2012 to 13.3% in the first half of 2013. It added that there has been an emergence of illicit 'white brands' that are not legally sold in Australia.
There was, according to the report, a 40% reduction in unbranded tobacco and a 154% increase in combined contraband and counterfeit. Total government revenue loss is reported to be at $1bn compared to $893m.
The conclusions have been seized upon by critics of unbranded tobacco packaging, which came into force in Australia at the end of last year.
Mike Ridgway, spokesman for seven UK packaging companies, said that the report confirmed that by "reducing the specification of packaging materials, the door is open to an increase in illicit trade".
He added: "The experience in Australia would undoubtedly be followed in the UK and other European countries by a similar trend. The profits from the illegal trading activities are enormous and damage not only government revenues but undermine the legitimate distribution and retail supply businesses as well providing a source of cheap tobacco products to the vulnerable and young people who are the categories within society that need protecting from the dangers of smoking."