Many foreign-based online gambling websites are flouting British advertising laws by offering inducements on adverts in taxis and on the London Underground.

Unlike land-based gambling firms, the offshore companies can advertise in the UK because they do not come under the British law's jurisdiction.

However, the companies are not allowed to promote inducements for their sites, such as advertising the value of cash pots or offering to match initial stakes – rules which many firms are now flouting.

The government is now cracking down on the adverts which appear in newspapers, taxis and on the Tube.

Tessa Jowell, the culture secretary, said: "It's clear that some adverts have been breaking the law.

""I am not willing to turn a blind eye to this and have agreed with the Gambling Commission that we should crack down on advertisers and publishers who knowingly break the law.""

The move is further bad news for the online gaming industry