Three pound coins in every 100 were found to be fake, according to official figures.
A Royal Mint sampling of coins has discovered that just over 3 per cent - about 44 million £1 coins - are counterfeits. The number of fake £1 coins has more than doubled in the past decade.
Any person using one is breaking the law, meaning that millions are unwittingly committing a crime.
Key signs that betray a fake include a poorly defined ribbed edge and a date and design on the reverse that do not match, experts say.
Lord Sassoon, the Commercial Secretary to the Treasury, disclosed that the number of counterfeit banknotes, mostly £20 notes, taken out of circulation last year was about 374,000.
The Royal Mint carries out surveys every six months to track levels of counterfeiting.
