Welfare workers have warned that more and more children are playing truant from school to work illegally in shops, restaurants and even factories.

As well as missing out on education, the children are also exposing themselves to work environments that are unsuitable and potentially dangerous, they warned.

Council authorities in the region last night admitted child labour was a "hidden" issue, but warned companies found illegally employing minors would be punished.

In the last year, Wolverhampton City Council has issued 35 warning notices to firms employing children.

Child employment officer Jan Hickman said: "We take a very dim view over the illegal employment of children, which often results in putting a child's health and safety at risk or adversely affects their education, and all reports we receive are investigated."

Sandwell said it has given out 470 legal permits to children, but revealed it was monitoring five cases of minors working without legitimate passes.

Sandwell's Cabinet Member for Schools Coun Ian Jones (Lab Tipton) said: "If we discover, either through an anonymous source or otherwise, a youngster is working we will investigate the situation." Coun Jones said there were examples of children being employed in a variety of jobs, including working in restaurants.

Three cases of children at work when they should have been at school have been identified in Dudley in the last six months.

A similar number have been investigated in Worcester during the last year.

But education chiefs fear the true extent of child labour is likely to be much higher.

A spokeswoman for Education Walsall, which runs the borough's education services, said: "We don't have any figures because it is a hidden issue." In many cases, firms have been employing children under the mistaken belief they are not breaking the law.

Under current laws, a young person can work if they are over the age of 13 subject to guidelines restricting the type of work and the hours.

They must not be employed for more than one hour before and after school on a school day and not before 7am or after 7pm each day.

However, some well-known firms are openly flaunting the laws, say experts.

One Midland welfare officer said: "I am not sure whether it is the case of ignorance or the bigger companies thinking 'they can't touch us' and what ever they fine us it is going to be nominal."