Police have urged businesses to be on the lookout for counterfeit pound coins after it was revealed one in every 36 in circulation is a fake.

The Royal Mint's currency survey found there were more than 41 million illegally-manufactured coins in the UK.

Leicestershire police said that despite the huge numbers, only four were handed in during the past 18 months.

Officers said it was usually small shops and taxi drivers who got caught out because banks confiscated the fakes and did not refund the cash.

Newsagent Ken Patel, of Wyvern Stores, in Rushey Mead, Leicester, said: "It happens a lot and people don't very often know they have a fake pound in their pocket.

"Most of the fakes are soft lead and appear very battered.

"One of the main scams happens at supermarkets when people offer a fake coin in exchange for a shopping trolley that has a real one in the slot.

"Some of the imitations are so good it's very hard to spot them."

Robert Chell, who runs a newsagents in Baxtergate, Loughborough, said: "If you're careful you can spot them and the people who are passing them soon realise the places where they can get away with it and those they can't. Whenever it happens we confiscate them.

Mark Swatland, of Costcutters, in Barrow Road, Sileby, said: "It's the fake notes that are the biggest problem because of the amounts involved but it's always annoying when a coin gets through. We train our staff to spot them."

Loughborough cabbie Noel Betram said: "There are millions and a lot of them end up with taxi drivers who get them in a handful of change from someone who then charges off."

A police spokesman said any reports of counterfeit coins were passed on to the Serious and Organised Crime Agency.

"Although we know they're out there, we don't get very many handed in, which perhaps isn't a surprise," he said.

"We'd like people to hand them over to us so they can be taken out of circulation. If anyone knows somebody who is making them or distributing them, we would like to know."

The Royal Mint spokeswoman estimated that 1,474 million £1 coins were in circulation at the end of March. "Of this number we estimate 2.81 per cent, or 41.42 million £1 coins, are counterfeit," she said.

Anyone with information should call police on 0116 222 2222.