Gina did not like the look of her skin. It was not that she had too many wrinkles or spots. Gina thought she was too dark. Gina was black, a dark rich black. But she desperately wanted to be lighter. Unfortunately, her desperation nearly proved fatal.

An Observer investigation has uncovered a booming multi-million-pound market in illegal and highly toxic skin-bleaching creams being sold across Britain to black and Asian men and women. Many are manufactured and sold in the UK and exported to Africa.

Gina, a Jamaican in her mid-twenties, from south London, is typical, although what happened to her is one of the worst cases doctors have seen. She felt that to be successful and attractive in modern-day Britain her skin needed to be paler. After speaking to friends she visited a shop in Peckham and bought some skin-lightening cream that promised it could bleach her whiter.

Gina used it twice a day and noticed that after a few days her skin looked fairer. Soon she was applying it more frequently, up to six times a day. After several months she noticed strange dark, blotchy marks on her thighs, legs and the sides of her face.

Her doctor referred her to a dermatologist who diagnosed an acute skin disorder caused by the cream. Gina's blood pressure was very high and her adrenal gland was malfunctioning. This proved almost lethal.

Dr John Meadows, the hormone specialist who treated Gina, said: 'It was a truly shocking case. Although I have seen similar cases, this was the worst. First, her skin was permanently disfigured. But most alarming was that her adrenal glands had stopped producing one of the hormones essential to life.'

Field quickly identified the culprit as Movate, the skin-bleaching cream Gina had been using. One of its active ingredients is a powerful steroid known as clobetasol propionate. This compound is not banned in this county, but such is its potency that it can be used only as a licensed prescription drug to treat extreme skin conditions such as acute eczema or psoriasis. Yet, for less than £2, Gina had bought it over the counter in a corner shop with no questions asked.

As The Observer has discovered, Gina is not alone - thousands of black and Asian British women are using similar creams to make them whiter. While some contain steroids which thin the skin, others contain the poisonous chemical hydroquinone, banned in Britain in January 2001. Hydroquinone interferes with the skin's pigmentation process and increases the risk of skin cancer.

Anybody caught selling creams containing hydroquinone can be fined £5,000 or jailed for up to six months. Yet an Observer reporter who visited several shops in London - including in Southall, Tottenham and Brixton - and Birmingham was able to buy these illegal products.

The Observer has learnt that this summer alone customs officers made two massive seizures of illegal skin-bleaching creams at Gatwick airport involving hundreds of thousands of products. On 27 July, more than 46,000 tubes were found in a cargo container from Lagos in Nigeria, labelled 'body cream'. The lotions were found to contain the steroid and were en route to a warehouse in north London whose owner was planning to sell them on to retailers as skin-lightening products.

Less than a month later customs made their largest seizure of illegal cosmetics when they inspected a container from West Africa marked 'foodstuffs'. Inside were thousands of skin-bleaching products containing the illegal chemical hydroquinone, with names such as Miss Caroline Lightening Body Cream and Crusader Skin Toning Cream. Both seizures are subject to criminal investigation by trading standards and the Medicines and Healthcare Products Regulatory Agency. The authorities are probing who are the rogue traders behind the illegal imports.

Danny Lee Frost, head of enforcement at the agency, said: 'It appears there is still huge demand for such products and big money to be made.' He admits the seizures are only the tip of the iceberg.

The adverts have a clear and simple message: dark skin means failure; fair skin is beautiful and equates to success. These images are not a throwback to apartheid South Africa or the slavery era in the United States, they are the images now staring out of products on thousands of shelves across the UK, not just in beauty salons but grocery stores, newsagents, even record shops.

According to Sherry Dixon, editor of Pride - the lifestyle magazine for the British black community - the scale of the problem is alarming. She believes that in part it is propelled by the success of a new generation of black celebrities who have lighter skin, such as Beyoncé or Lil' Kim. She said: 'These creams are used by all ages and both sexes. It is a taboo subject. Nobody likes admitting they use the creams, but many do. They look to role models like Beyoncé and believe her success is because she is lighter skinned. This is a real problem and we need to tackle it from within.'

Razna Paneser, 21, recently graduated from Middlesex University with a degree in psychology. She wants to be a model but believes her skin is too dark.

Eight months ago she started using a legal cream her boyfriend's mother used. 'I would prefer to have lighter skin,' she said. 'If this works, I will be the colour I want to be; not because I think there is anything wrong with my skin colour, but it is the colour that people think I should be.'

She was teased by her sister for having darker skin and was told she would never be an actress because she was too dark. 'Asian people don't think that a dark-skinned girl can be beautiful,' she said. 'I think that started when England colonised India.'

Razna is unusual. She is one of the few people to talk openly about using creams. She recently featured in the ITV film Bleach My Skin White. For most women - and some men - it is applied in the secrecy of a bathroom or bedroom and hidden in a drawer. 'It's like people who bleach their hair blond but want to be thought of as being a natural blonde,' she said.

For her part, Razna believes the cream she is using is working, and it has become an important part of her daily routine. 'It's a bit like a drug; you don't want to stop it till the end... I intend to use it for a long time. When I come home, I think I should put some cream on, otherwise I might go darker.'

Fortunately for Razna, the cream she was using was not one of the illegal creams, but a safe beauty product called Fair and Lovely. This is not made by a small, unknown cosmetics firm, but by the British manufacturing giant Unilever in India. It is just one of several whitening products the firm markets in India.

One advert for its product shows a young Indian woman dreaming of being famous, but her skin is too brown. One day her sister hands her a tube of Fair and Lovely skin cream. Then the ad flashes forward and she is wearing high heels and her hair is curled. Most important, her complexion has changed dramatically. She is pale and has landed her dream job as a cricket commentator.

Soho road lies at the heart of Handsworth in Birmingham. It is a street lined with shops catering to both the city's thriving Asian and black communities. On one corner is MJ News, a small newsagent selling everything from frozen food to magazines. Behind the counter are shelves full of beauty products, including skin-whitening creams.

An Observer reporter asked a man standing behind the till for a skin-lightening cream. He offered two: Movate, which is made in Italy, and Hyprogel from Germany. Both contain the steroid clobetasol propionate, the chemical that nearly killed Gina.

Just down the road from MJ News is Beauty Queen Cosmetics which sells Skin Success Cream. This is also made in Italy and contains a powerful steroid. All the creams cost less than £2. These should be available only through a doctor's prescription.

In London, The Observer was able to buy creams containing the banned chemical hydroquinone in Southall, Brixton, Peckham and Tottenham. Asked why they were selling illegal creams, the shopkeepers pleaded ignorance. 'I did not know it was wrong,' said Mohammed of MJ News. 'Our customers ask for it and we buy it from a supplier. It is very popular.'

For the authorities who have the job of seizing these creams and prosecuting retailers, the problem is becoming almost impossible to contain.

Ray Bouch, a trading standards officer at Lambeth council, who has successfully prosecuted a number of shops in south London, is aware of dozens of other cases across the country.

'We have seized thousands of these illegal creams. But as soon as we go, it seems the shelves are restocked within hours,' Bouch said.

He believes that many of the retailers buy the creams from hawkers who visit stores with a case full of lotions smuggled from abroad. Yet behind these sellers is a more orchestrated black-market trade where huge profits can be made. The Gatwick seizures prove that.

While many of these products containing hydroquinone are brought in from Africa, many others are made in Britain.

The law allows companies here to make the products even though they contain substances banned in Britain as long as they are for export. The products are then smuggled back into the UK.

One of the skin-lightening creams containing hydroquinone is named Zarina. It is made by Fairtrade International, based in Barnet, north London. Another, Rico Complexion Cream, is made by General Healthcare based in Hayes, west London.

Spokesmen of these firms claim they make their creams for export and that it is not up to them to police the trade. 'We have never sold one tube containing hydroquinone in the UK. We know it is illegal,' said Eric Dupont of General Healthcare.

'We used to sell it to the Middle East and North Africa where it is perfectly legal. We have no control over what happens to it after that.'

Pride editor Dixon said: 'How can it be that a British company is allowed to make a product that can seriously damage somebody's health and would be illegal to sell here, but be allowed to export it to developing countries knowing not only that it will be used by people not aware of the dangers, but also that there is a fair chance of it ending up back in Britain?'

Toxic skin bleaching creams made in the UK have been found in dozens of countries, including Nigeria, Ghana, Tanzania, Zimbabwe and South Africa.

Dermatologist Sujata Jolly has treated many women whose skin has been damaged from using the banned creams. Although Jolly was instrumental in getting hydroquinone made illegal, she fears that, whatever action is taken by the authorities, it will not shut off the supply.

'These creams are easily available over the internet, and as long as the demand is there there will be somebody to sell them.'

'I see girls as young as 16 coming in to buy these creams. It's a trend, isn't it?', said the young sales assistant at one shop in Brixton. 'Women want to follow a look. 'You can tell if someone has been over-using face creams, especially the ones with hydroquinone in them, as it damages their skin. Some use a tube a week.'

In the name of beauty, some men and many women, are taking a very high risk.

· To protect her identity, Gina and the name of the doctor who treated her are pseudonyms.