The false documents — which could be used by terrorists, money launderers and illegal immigrants — are being mass-produced by factories in eastern Europe. The counterfeits are cheap, realistic and available in large quantities.

An undercover reporter acquired six bogus passports and five false driving licences from a London-based middleman with links to Moscow gangs. They included a British travel document normally supplied to those granted asylum.

The middleman boasted he could supply 300 passports a month from several EU countries and neighbouring states. Whereas forged passports cost up to £7,000 on the black market, these cost £600 each.

There is growing concern about proliferation of false passports. Last Friday, two Romanians were jailed for running a passport counterfeiting operation in Croydon, south London.

The Sunday Times inquiries began last November when the reporter responded to an advert in a UK-based Russian-language newspaper that offered “help” with passports.

As a result, the reporter was contacted by Artur Hairapetyan, a 28-year-old Armenian who lives in south London. He promised to provide false passports at a “good price”. The reporter ordered six, saying they were for an east European who wished to open offshore bank accounts.

In conversation, Hairapetyan admitted: “The business we are now starting has got a lot in common with the activities of terrorists. All the terrorists who are coming here are using similar fake passports.”

A passport expert who examined the documents said last week: “Generally, the documents are good enough to fool a bank or finance house . . . They should not fool immigration, but passengers pass through the EU channel at such speed officers do not have time to see the documents properly.”

Hairapetyan has links with Moscow criminal gangs and gained political asylum in Britain using forged papers. His name and the documents were passed to the Home Office and last night were being studied by the Metropolitan police.

The Home Office said: “We take these allegations seriously . . . There are constant efforts to update immigration staff on new and existing EU passports, and on identifying existing and emerging methods of fraud.”

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