Police confirmed yesterday that they were aware of the situation and said they would crack down on people-smuggling out of Hong Kong. A spokesman said police had arrested an illegal immigrant in Lau Fau Shan a month ago who was being smuggled back to the mainland and the case was being investigated.

'We appeal to the public that if they have any information about this illegal activity to report to the police immediately,' the spokesman said. 'You can be assured that our enforcement action will continue.'

The revelation comes as the city's police battle to stop illegal immigrants entering Hong Kong.

Police caught two boatloads of illegal immigrants in 24 hours this month, including one boat being piloted by a 16-year-old. One 10- metre boat contained 13 Pakistanis, crammed together, while the other contained eight illegal immigrants from Pakistan and Africa.

Police say the number of illegal immigrants has increased markedly because of a ruling in the Court of First Instance in March that asylum seekers are not in breach of Hong Kong law while waiting for a ruling on their status.

A new law is expected to be tabled in the Legislative Council next month to plug the loophole being exploited by illegal immigrants.

Most of the illegal immigrants come from South Asian countries such as Pakistan and Bangladesh. But people from Africa are increasingly showing up, along with mainlanders going home after working illegally in the city.

During a visit to the village and its wholesale seafood market at dawn on Wednesday with immigration consultant Richard Aziz Butt, some members of a group of eight illegal immigrants who were returning to Shenzhen were spotted at a bus stop outside the village.

A Pakistani contact of Butt's who was travelling with the group said they had stayed in Sham Shui Po overnight before travelling together to the village.

The man, who speaks fluent Cantonese after several years working as a labourer in Hong Kong, said he was returning to Pakistan to visit his sick parents and expected to return to the city in several months. He would not say what identity documents he planned to use to return to Pakistan.

Those making the crossing on Wednesday morning were four mainland women, two Pakistanis, one Indian and one African, the contact said. The people-smugglers got their passengers to dress in fishermen's clothing to avoid detection.

Butt said many of his potential clients had told him of the village and boasted about how easy it was to slip in and out of Hong Kong.

'It is very dangerous for Hong Kong that people can slip into the city and then leave again without detection,' he said. 'This raises the spectre that they can come here, commit crimes and leave with impunity.'

Several senior police officers expressed grave concern about people-smugglers moving with impunity between Hong Kong and the mainland.

'There is already considerable and growing fear within the force about people-smuggling and the arrival of more and more illegal immigrants from South Asia and Africa, and especially with the constant threat of terrorism,' one officer said. Police said the smugglers might use the village as a conduit because mainland fish merchants were allowed temporary visiting rights to sell their fish.

An Immigration Department spokesman said mainlanders involved in the fishing industry were granted temporary work permits at seven markets in Hong Kong.

While the department controlled those who visited Aberdeen, Sai Kung, Tai Po, Shau Kei Wan, Kwun Tong and Castle Peak, the police were responsible for controls in Lau Fau Shan.