Over a dozen British tour operators are selling holiday packages to Burma in resorts owned by individuals with strong links to the repressive military junta, breaching a European Union blacklist.
Tourism is thought to earn the generals who run Burma £180m, with a significant proportion coming from the UK.
Many of the leading resorts are owned by state entities that lease properties to investors. Some resorts, it is alleged, have been built by slave labour and involved the forcible displacement of huge numbers of people from their homes with little or no compensation.
Tour operators contacted by the Observer such as Undiscovered Destinations and Bamboo Travel said they were unaware that resorts were on a banned list. Operators maintained that they believed it was important outsiders visited the troubled nation.
But Tricia Barnett, director of Tourism Concern, whose report on the Burmese travel industry will be published later this week, says: "It is the responsibility of tour operators to ensure that they ... do not provide financial benefits to the military dictatorship. Given the lack of transparency in Burma and the overlap between state- and private-owned enterprises, the best way to do this is to stop trading with Burma."
