Sniffer dogs trained to detect the plastics used in DVDs are spearheading the police’s fight against the flourishing £200 million trade in pirated films.

Last week The Times joined Lucky and Flo, two black labradors, and their handlers on their first operation in London tackling the illicit market. Britain now has the world’s biggest black market in pirate films after the US, with an estimated 49.5 million counterfeit DVDs sold last year, compared with 32.5 million in 2006, and earning the bootleggers well over £200 million.

Trained in Northern Ireland, the dogs have proved so successful in sniffing out the chemicals used in illicit manufacturing that gangsters have put a $30,000 (£17,000) bounty on their heads. Their first operation in London was in Tower Hamlets in the East End, one of the main centres for counterfeit discs.

Last week’s search began among parked cars in rundown streets around Whitechapel. The cars are used by traders hiding in shadows near by to keep their stock of illegal discs. When directed by their dog handler, the dogs stood on their hind-legs to reach up to a car's bootl, energetically running their snouts across its surface to give it the all clear before moving on the the next vehicle, seconds later.

Within minutes of walking into Whitechapel market, the dogs had led police to a stash of 474 illegal discs. They were stuffed into plastic-bags beneath a rickety stall strewn with piles of blankets, sheets and pillows. Two police officers swooped on a Chinese man in his twenties, handcuffing him to the stall’s post while Lucky and Flo finished their search of the plastic boxes and bags on the pavement.

The dogs are trained to identify finds by staring calmly straight at them, either sitting or standing. In return, they get a reward — their favourite toy, a tennis-ball — while police make their arrest. Illegal copies of the cinema’s biggest hits are sold for only £4 to £5, compared with £11 to £20 for the genuine article. The latest Batman movie, The Dark Knight, was among the haul.

Searching premises could be transformed by the sniffer dogs. On one operation, Lucky and Flo directed police to a stash in a street of lock-ups. Although they cannot distinguish between legal and counterfeit discs, they enable large areas to be “scanned” within minutes rather than hours or days.

The dogs’ greatest success came during a visit to Malaysia, a world centre of counterfeited films, when two raids in Johor Bahru unearthed 1.7 million illegal discs after which gangsters posted a bounty. A third sniffer dog, Manny, died shortly afterwards, its cause of death yet to be determined.

In the past, most illegal recordings were created in South East Asia (mainly Malaysia, Pakistan and China) before being imported into Britain to be distributed through criminal networks. Now there has been a shift towards “homegrown” piracy — discs created in the UK using DVD burners working 24 hours a day.

Sales outlets include some of the UK’s 7,000 legal street markets, as well as under the counter in pubs and clubs and even door-to-door.

Eddy Leviten, from the Federation Against Copyright Theft (Fact), the film industry’s anti-piracy body, told The Times that film piracy is a particular specialism of Chinese illegal immigrants: “They’ve got it carved up, just as the Romanians have prostitution, the Turks heroin and the Vietnamese cannabis.”

Those found guilty of selling counterfeit discs can face a maximum ten years imprisonment and/or an unlimited fine. But prison sentences are uncommon, according to Mr Leviten. “It depends on the court and what legislation they are prosecuted under," he said. "A lot [of the sellers] are here illegally. They can’t be deported to China because the Chinese say they can’t prove who they are. So they can’t work legally here either.”

The Chinese man arrested in Whitechapel market last week was no stranger to the police. This was his seventh arrest. Once again, he was released to await a court summons.

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