Smuggling has rocketed since the relaunch of cross-Channel ferry services from Sussex.

Newsagents, pubs and off-licences have reported a huge drop in business with one newsagent claiming losses of £400 a week.

Alcohol and cigarette sellers said trade had fallen by up to 25 per cent since ferry services between Newhaven and Dieppe re-started.

There are now calls to cut from 26 to 13 the number of Customs officers to be scrapped at Newhaven. In 1987, Newhaven had about 100 officers.

The proposal to reallocate customs officers from Newhaven sparked fears the port would become a soft touch for smugglers.

Local traders said the smugglers were making a killing, openly selling cut-price cigarettes from plastic bags in pubs and crates of beer from their homes.

A spokesman for the Sussex Licensed Victuallers Society said the high tax on alcohol and tobacco in Britain meant more people were willing to buy goods from smugglers.

Spokesman Bev Robbins said sales of cigarettes from his Brighton pub had dropped by about 25 per cent.

He said: "We know half these smugglers - they go around the pubs in Brighton trying to sell cigarettes from plastic bags.

"Sussex Licensed Victuallers Society has noticed sales of cigarettes in vending machines have gone down since the reintroduction of the ferry service. People are smuggling more."

Mr Robbins said tobacconists in Dieppe had told him their sales had rocketed.

He said: "The Government keeps putting tax up and quite frankly this is encouraging people to break the law."

Roy Haria, owner of Roy's Liquor Store which has three shops along the Sussex coast, said: "Our sales went down as soon as the ferry started running, particularly tobacco, wine and beer."

Newhaven MP Norman Baker said: "It goes to show the cuts in customs officers I opposed was a foolish cut and this needs to be reversed immediately."

However, customs insisted catching smugglers remained a priority.

On Wednesday night, a car was seized at Newhaven containing a kilo of rolling tobacco, 100 litres of wine and several thousand cigarettes.

A Customs spokeswoman said the officer jobs at Newhaven were not being cut but the staff would be relocated in the next few months.

She said: "All units are mobile and can be brought in from anywhere along the South Coast."