Almost a fifth of British businesses have admitted to using unpaid interns to "get work done more cheaply" and prop up company profits during the recession, according to a new survey.

The research, carried out by YouGov on behalf of Internocracy – a social enterprise that develops work experience schemes for employers – found that 17% of UK businesses had taken on interns to use as a cheap source of labour, while 95% of the 218 UK managers who responded agreed that interns were "useful to their organisation".

The Internocracy study also found that only 12% of company managers and 10% of young people knew unpaid internships could be illegal under employment law.

"It's a real shame that young people don't know their employment rights," said Internocracy's chief executive, Becky Heath. "Conversely it is disappointing that businesses don't understand what interns are worth and the new talent, energy and enthusiasm they bring to the workplace."

Earlier this month Nick Clegg, the deputy prime minister, argued that unpaid internships were promoting a crisis of social mobility, in doing so apparently contradicting the views of the coalition's Conservative prime minister David Cameron.

The Chartered Institute of Personnel and Development estimated that last summer there were a quarter of a million interns working in UK companies, with the vast majority believed to be unpaid positions.

Clegg and the Low Pay Commission have called on HMRC, the Whitehall department responsible for minimum wage (NMW) enforcement, to be tougher on employers. Under NMW legislation, workers aged over 21 are entitled to at least £6.08 an hour if performing any tasks which can be classified as "work".

Business lobbyists the Confederation of British Industry argued that young people doing internships had no right to expect payment. "The vast majority of interns especially in a very difficult labour market are looking for valuable experience which strengthens their ability to get their next job. The reality is that they do not expect to be paid for this," said a CBI spokesperson.

The survey, which drew on opinions from 2,609 people, found that only 9% of the ordinary public believed the experience of an internship "was payment enough".

Tanya de Grunwald, who runs the Graduate Fog website which campaigns for interns' rights, said: "Many managers continue to hide wimpishly behind the defence that they are offering these opportunities out of the goodness of their hearts, in order to give young people the chance to gain some experience.

"We need to move away from this bogus idea. What these companies are doing is taking their labour without paying for it. [Interns] are not just making the tea and distributing the post – they are doing real jobs and they deserve to be paid," she said.