Foreign backpackers funding their Australian travels through illegal sex work are robbing the legitimate industry of profits and threatening clients' health, a brothel lobbyist warned on Tuesday.

Many young tourists to sun-soaked northeastern Queensland state were making a quick buck as black market prostitutes, undermining registered operators' attempts to uphold health and safety standards, the Queensland Adult Business Association's Nick Inskip claimed.

"Especially when you go up to northern Queensland, it's not unusual for them to be working in the illegal escort industry," Inskip said.

Having fewer overheads, they could often undercut the legal sex industry on price, making it harder for the state's 23 legal brothels to make a profit, he said.

"They can charge less because they are not paying GST (goods and services tax), staff costs for managers and receptionists," Inskip said.

The tax office, which recently began a drive to collect tax from the industry, was also hard pressed to keep tabs on their undercover activities, he said.

"No one asks to see their passports. If you go to a licensed brothel the first thing they do is ask for your passport and whether you are here legally."

Although prostitution at registered brothels is legal in many parts of Australia, recent research suggests the taxman's attempts to target the industry has sparked an exodus towards riskier illegal sex work.

Academics have also noted that the crippling cost of higher education in Australia has forced some foreign students to seek work as illegal prostitutes to make ends meet.

AFP