More than a quarter of the cigarettes smoked in Ireland last year were illegal, it has been claimed.
The proportion of non-duty paid tobacco in the country has risen, with manufacturers blaming increased taxation.
One in three cigarettes in Waterford was purchased from the black market, the Irish Tobacco Manufacturers' Group said.
A spokesman said: "We felt that given the large increase that was put on legitimate cigarettes in December 2011, there would be an upsurge in the illegal market and that is exactly what has happened.
"The shocking reality is that one third of tobacco consumed in Ireland in 2012 completely avoided excise and VAT."
In 2011 excise duty on a packet of cigarettes rose by 25 cents and VAT increased to 23%.
According to the tobacco lobby group, the level of non Irish duty paid (NIDP) cigarettes in Ireland rose to 28% in 2012, making it the second biggest tobacco supplier in the country.
The research, carried out by collecting empty packs from 22 towns and cities across the country, indicates an increase since 2011 when NIDP was measured at 25% in Ireland.
The highest incidence of NIDP cigarettes in Ireland was measured in Waterford, which has an average level of 33% or one-in-three cigarettes being purchased from the black market.
The HSE has said extensive research has demonstrated the effectiveness of higher taxes in reducing smoking.