Nine out of 10 software packages offered on popular auction sites, such as eBay and Yahoo, are illegal, according to a fresh report.

The US Software and Information Association (SIIA), which represents software developers, reports that 91 per cent of applications on auction sites are pirated, compared to 60 per cent a year ago.

According to the report, sellers of illegal software are increasingly using sophisticated means to make money on popular auction sites. Peter Beruk, SIIA vice-president said: "They started to manipulate the rules of internet auction sites to data-mine email addresses of bidders of software, creating a direct marketing channel."

He pointed out that while eBay has tried to counter this by making it impossible to search for certain words, such as 'back-up' and 'CD-RW' in the software category, the pirates have become more sophisticated by using data-mining techniques.

According to the SIIA, Amazon.com has instituted a policy of reviewing all auctions that are posted on its service. Any activity that appears suspicious is removed and the seller faces banishment from Amazon's site.

Ebay uses a different approach and introduced a Verified Rights Owner programme that is designed to assist copyright and trademark owners in protecting their products against pirates and counterfeiters. The company has also maintained a policy of prohibiting any 'offline' transactions which occur when seller and prospective buyers move beyond the auction site to conclude their deal.

Meanwhile Yahoo has launched a scheme to help enforce refined policies and identify items that do not comply with Yahoo's terms of service, according to the SIIA.

Software developers are also fighting hard to prevent their applications from being sold illegally. Steve Wozniak, senior director of anti-piracy at web software developer Macromedia, said: "The auction sites are a one-stop shopping centre for theft and we can't just stand by and let someone steal our product."

But he believes auction sites are also to blame. "They [the auction sites] are making money from the people who are selling the stolen software. Ebay has known that over 90 per cent of the software sold is illegal and it continues to rake in millions of dollars while taking baby steps that just don't solve the problem," said Wozniak.

EBay and Yahoo failed to respond to calls for comment.