Three hundred corner stores have been offered black-market tobacco to sell, research has revealed.
Shop owners claim they will lose on average 175,000 euro this year alone because of the country's booming smuggling and counterfeiting racket.
Benny Gilsenan, spokesman for lobby group Retailers Against Smuggling, said members were powerless to protect their small businesses.
"The situation is bleak and our members are convinced that it is going to get considerably worse in the coming months," he said.
Research commissioned by retailers uncovered a worrying trend that in Dublin alone more than one in six shops have been offered counterfeit cigarettes to sell - up from just 10% last year.
It is estimated the Exchequer will lose up to 500 million euro year through the black-market trade in tobacco. Japan Tobacco international, formerly Gallahers, struck off nine retailers last year year for selling illegal products.
Mr Gilsenan said: "We have seen no leadership from those in power and this is reflected in the survey, our members aren't sure where to turn to and which department of government should be tackling the problem.
"The retail sector is one of the biggest in Ireland, we employ hundreds of thousands of workers yet we are being left to fend for ourselves when it comes to this matter. We need help from the current Government or else we are facing a very bleak future."
The research carried out by Behaviours and Attitudes revealed two thirds of shop owners said illegal tobacco was readily available in their area. The survey of 500 stores across the country found the vast majority, 81%, feel the Government is not doing enough to tackle the lucrative black market trade. It also warned that just over a quarter of cigarettes smoked in Ireland are illegal.
Retailers Against Smuggling claimed that the black-market trade has spread around the country with Dublin's north inner city recording the highest levels but Kildare, Offaly, Westmeath, Cork city and other parts of Munster identified as hotspots.