Britain is the “mercenary kingpin” of global private military industry, which has been booming ever since the “war on terror” began 15 years ago, according to a report seen exclusively by the Guardian.

The UK multinational G4S is now the world’s largest private security company, and no fewer than 14 companies are based in Hereford, close to the headquarters of the SAS, from whose ranks at least 46 companies hire recruits, says the report by British-based charity War on Want.

The huge increase in the number of private military and security companies, with contracts running into billions of pounds, signals the return of the “dogs of war” (mercenary) era that followed the invasion of Afghanistan and Iraq, said John Hilary, executive director of War on Want.

At the height of the occupation of Iraq, about 80 British companies operated in Iraq; there are now hundreds operating in areas of conflict around the world, bound only by a system of self-regulation.

In Libya, UK companies led the way after the fall of Muammar Gaddafi in 2011, the report stated. The Security Contracting Network, a recruitment forum for the industry, posted a message in the days following Gaddafi’s fall saying: “There will be an uptick of activity as foreign oil companies scramble to get back to Libya … follow the money, and find your next job.”

Leading UK private military company Aegis Defence Services (now part of GardaWorld), Control Risks, and Olive Group are also among the top recruiters. Their senior executives and board are dominated by former military officers, says War on Want. The chief executive of Aegis, for example, is former Gen Graham Binns, one-time commander of British troops in Basra.

G4S last year secured a contract of up to £188m to provide security for the Basrah Gas Company and signed a five-year, £100m contract with the British embassy in Afghanistan. Clients of G4S, whose annual turnover in Africa has reached £500m, include Royal Dutch Shell and AngloGold Ashanti, War on Want reports.

Foreign Office spending on contracts with private UK security companies rose from £12.6m in 2003 to £48.9m in 2012, according to official figures.

The use of private armies and “floating armouries” by shipping companies is also growing, according to War on Want. Floating armouries are ships harboured at sea, stacked with high-powered rifles, night-vision goggles.

More than half of the members of the Security Association for the Maritime Industry (SAMI) are British. Protection Vessels International Ltd, a UK company, describes itself as the “global leader in armed maritime security”. It was set up in 2008 by senior former military figures “with the express purpose of applying military standards of security”, with a team “drawn from the highest echelons of UK Royal Marines, UK government intelligence and commerce”, War on Want notes.

The Guardian has reported how private security companies protecting ships against Somali pirates store their weapons on floating armouries in international waters to avoid arms smuggling laws. In 2013 Whitehall issued 50 licences for floating armouries in the Indian Ocean and Gulf of Aden.

Hilary of War on Want said: “Private military contractors ran amok in Iraq and Afghanistan, leaving a trail of human rights abuses in their wake. Now we are seeing the alarming rise of mercenaries fighting on the frontline in conflict zones across the world: it is the return of the ‘dogs of war’.”

He added: “For too long this murky world of guns for hire has been allowed to grow unchecked. In letting the industry regulate itself, the government has failed: only binding regulation will do. The time has come to ban these companies from operating in conflict zones and end the privatisation of war.”

Britain has signed up to an international code of conduct for “private security service providers”, laying down principles covering accountability to the law and human rights. However, it is a voluntary code of conduct.

The UN is drawing up plans for an international convention that is legally binding on private security and military companies. Switzerland bans companies based in the country from operating in conflict zones.