In the past three years the Bank of England has introduced new pounds 5, pounds 10 and pounds 20 notes. Hundreds of thousands of pounds was spent on developing the notes, which took nearly ten years to design and include a host of security features aimed at thwarting forgers.
Yet the Bank of England and the police's counterfeiting team admit that they have failed to reduce the number of forgeries.
In 1989 about pounds 100,000 worth of counterfeit notes were recovered. In 1990 the total was pounds 500,000, a figure which rose to more than pounds 4m in 1991 and about pounds 6m last year.
Police believe the total will be significantly higher this year.
Forgers have access to increasingly sophisticated machinery, such as colour photocopies that use laser technology, and electronic scanners, to help them with the counterfeiting.
Work on the latest banknotes, known as Series E, began in the early Eighties. The Bank of England spends more than pounds 700,000 each year on research and design of its notes.
Security measures on the new notes include a metallic thread that appears as a series of silver dashes on the front. Complex designs in pastel shades have been used, which are harder to copy.
Parts of the note are raised and cotton rag paper, without whitener, is used. The Bank of England says it has also included several 'secret' features to help with identification.
However, despite these measures, the Bank privately admits that a disturbing number of forged Series E notes are getting through.
A new pounds 50 note is being introduced next year, but Detective Sergeant Steve Putman, of the counterfeit-currency unit of the National Criminal Intelligence Service, said: 'I've no doubt that when the new pounds 50 comes out it will be only a matter of weeks before a counterfeit is passed.
'The new series of notes are harder to counterfeit, but a forger will always find a way round any obstacle put in his way, especially with the advances in technology.'
DS Putman added: 'This is not a victimless crime. The proportion of counterfeit money circulating on the high street is large.'
He believes that it is still relatively easy to spot a
counterfeit note, providing people ensure that: it feels crisp; the print is sharp and the colours clear and distinct; the watermark is hardly apparent until the note is held up to the light; and the thread is a bold line.
'Unfortunately it's often not possible for a member of the public to have a proper look at what they are handling,' he admitted.
The pounds 5 was first introduced in June 1990, but a new, brighter pounds 5 note was phased in from March this year after complaints that the first one was too similar to the pounds 20.
The Bank of England had deliberately printed the pounds 5 with hard-to-read figures to combat forgery.
The current pounds 10 was introduced in April last year - the old one will be phased out next year - and the pounds 20 note came into circulation in June.
A spokeswoman for the Bank of England said the current counterfeiting was only 'a tiny fraction of 1 per cent' of the pounds 17bn currently in circulation.
However, she admitted: 'There has been some increase in the level of counterfeits. We believe this is linked to the use of colour copiers, which are becoming more complex.
'Whatever we do, there will always be people who try to beat the system.'