As night fell, scores of women emerged in the labyrinth of streets and alleys by the Black Sea. Dozens gathered at Tamozhennaya Square, beside the forbidding iron gates that guard the entrance to the city's port. When a car pulled over, girls swarmed towards it, striking poses in the headlights. A mamachka – a female pimp – negotiated a deal. Moments later a scantily dressed figure tottered forward and climbed inside.

Welcome to Odessa: the strategic southern Ukrainian port that has emerged as one of the principal hubs of the international sex trade. Blighted by police corruption and organised crime, the city has become a marketplace where women are bought, sold, deceived, abused, and in many cases trafficked to a hellish life abroad.

Last week, the most comprehensive study ever undertaken of human trafficking worldwide was published by the US state department. The Trafficking In Persons report estimates up to 800,000 human beings continue to be traded across borders. Many end up in brothels and massage parlours across western Europe. Many come from Ukraine.

According to the report, the numbers of Ukrainians forced into prostitution "continued to increase" in 2010; women were routinely trafficked to and from the country. The authors listed the countries involved: Russia, Poland, Turkey, Italy, Austria, Spain, Germany, Portugal, the Czech Republic, the United Arab Emirates, Indonesia, Kazakhstan, Azerbaijan, Israel, Greece, Finland, Norway, Denmark, Ireland, Lebanon, Benin, Tunisia, Cyprus, Aruba, Equatorial Guinea, Bosnia, Kosovo, Serbia, Hungary, Bulgaria, Moldova, Slovakia, Syria, Switzerland, the US, Canada, Belarus … and the UK.

Odessa, founded by Catherine the Great in the 18th century, is at the heart of this dark, modern trade in human lives. Campaigners call it the European hub for the trade in sexual captives. Later this month the British government will unveil its much-delayed and much-criticised anti-trafficking strategy. It is expected to recommend that attempts should be made to identify and disrupt trafficking networks at "source". A visit to Tamozhennaya Square and the remainder of this menacing city should count among its first priorities.

Away from the water's edge, within the offices of anti-trafficking charity Faith Hope Love, Olga Kostyuk confirms that "high season" has begun – the annual migration of thousands of women to join Odessa's sex trade. Some have been coerced. Some have been deceived by offers of jobs in offices, work as models or lucrative new employment within the EU. Some were simply so desperate they saw no other way to survive.

Two miles east of Tamozhennaya Square, a group of women huddle on the dusty sprawl of Kolontayevskaya Street. Here punters pay €40 (£36) and violence against the women is routine. It is from this desolate stretch that many women go missing, presumably trafficked. Those who remain concede they are trapped.

Milla, 18, has been working the patch since she was 12. "My mother died and my dad threw me out – there was nothing else I could do." Her friend Katrya, 17, began when she was 14. "I want to stop, but there are no jobs so I carry on."

A recent survey of Odessa's prostitutes found that nine in 10 were desperate to escape a trade whose true scale remains unknown but is certainly vast. Researchers identified 4,497 individuals working Tamozhennaya Square last year. This year, until the start of June, 1,174 women have been recorded. Every day new faces appear in the headlights.

Huge numbers are sucked into prostitution from Moldova and its poverty-mired breakaway republic, Trans-Dniester, just 30 miles away. Villages have been emptied of young women, say local campaigners. About half the women interviewed by the Observer hail from Odessa Oblast, the sprawling rural hinterland to which, Kostyuk said, female traffickers were frequently dispatched, luring village girls with tales of wealth and opportunity.

Once they are in Odessa, the exploitation and exportation of many of the women is managed by a hierarchy of pimps, mamas and mafiosi, who control the women with the complicity of corrupt elements in the police. This criminal network evolved after the collapse of the Soviet Union left a power vacuum, quickly exploited by the Russian mafia. In recent years it has flourished as never before. Last week's US report highlighted the role of government officials in trafficking.

Prosecutors, counter-trafficking police and border guards are all implicated in the sex trade. The women at Tamozhennaya Square say they pay police 50 hryvnia (£3.90) a night. Many allege police brutality. Kostyuk, sitting amid the case files of the 8,000 or so women Faith Hope Love has assisted during the past decade, refers to a "global mafia". Her charity operates freely in part because its head is a senior Odessa police officer; Kostyuk herself is a former officer. Sergiy Svystun, director of World Hope Ukraine, a charity that specialises in rescuing teenage girls from Odessa's streets, said: "It's highly dangerous. Trafficking is big business; the police are involved."

Women who are not trafficked abroad find themselves obliged to take their chances on the violent streets of Odessa. Those selling sex on Kolontayevskaya Street are familiar with the brutality that characterises the trade. Upsetting the pimps carries a high price. Milla said: "They drive us to the city outskirts and we are raped and beaten. They leave us there. No one does anything because they pay the police."

One woman told the Observer how she was gang-raped by eight men recently. She took two days off to recover before heading back to the street. Another had been forced to have nine abortions by her mama. Some had been shot.

Corruption manifests itself in other forms. Svystun said state orphanages sold children. Faith Hope Love recently attempted to rescue a 15-year-old girl from an Odessa orphanage. "But she did not want to stop working until she had seen her next client. Her ninth that day," said Kostyuk. Later they tracked down the pimp. It was a teacher at her school.

Thousands of girls disappear among the scores of private sex flats, saunas and clubs scattered throughout the city. Charities cannot reach these women. "Even when we contact their pimps, we never get to see the girls. We still don't really know the number of girls held," said Inna Tymchyk of Faith Hope Love. All they have are the reports of naked girls screaming from the balconies of high-rise apartments; sightings of 15 women at a time being bundled into taxis from unknown addresses.

Then there are whose stay in Odessa is brief. Soon they discover that their grim fate will be played out elsewhere. Kostyuk cites the case of one girl who was trafficked to the Balkans and condemned to an underground dungeon. When rescued, she had been starved of natural light so long her skin was blue.

Methods used to export women vary. Oxana Kalemi, 35, who was transported from Ukraine to a Birmingham brothel, describes how she was forced inside a box placed on a lorry and driven overland through Europe. "It went very quiet for a time. I don't know but I guess I came over by boat."

Most, though, are lured from Odessa by the promise of a better life. Predatory traffickers trawl the city seeking fresh victims. A social worker for Faith Hope Love described how her 15-year-old stepdaughter had already survived two trafficking attempts. On one occasion, while working in a bar, a woman offered a way to make more money. "She said: 'I can arrange work in Italy in a bar but don't tell anyone about it, just give me your passport and I will arrange a visa.' But I told her to get out of this situation."

Soon after, the same girl was intrigued by adverts offering work in the EU. Her mother accompanied her to the "job agency". "We went through a labyrinth of corridors to get to the office," she said. "There were three desks and three men of dubious appearance. They seemed very happy this girl had come to talk to them, but not to see me."

Sergei Kostin, who works at the Way Home project for Odessa's homeless, said that duping young women with promises of a better life in the EU was one of the most common tactics. "A lot of women have been deceived and have left the country." Some are ferried by boat across the Black Sea to Anatolia. Others are flown to western Europe or taken by train to Russia. "We track down victims thousands of miles away," said Kostyuk. One described how she was persuaded to fly to Istanbul by a friendly woman offering a job in a Turkish gift shop. On arrival she was imprisoned in a hotel.

Sofiya, 26, said: "They said my job was sex. A client came in, and I started screaming." She was sold to a trafficker in Izmir, who owned two Moldovan girls, then on to another, joining 38 women kept on the roof of a five-floor hotel. She was repeatedly beaten. After eight months she was arrested during a police raid, imprisoned in Istanbul for 30 days and shipped back to Odessa.

How many disappear is unknown. Svystun, the World Hope director, said he knew of 20 girls who had disappeared. None had been found. Relatives frequently contact Kostyuk in the vain hope she has located a missing daughter last seen in Odessa.

Many victims end up in the UK. At another of the city's principal red light areas, outside the railway station, Yaryna, who has worked the patch for eight years, said: "Quite a few go abroad. I know a couple of the girls who go to London and they get married. A lot go missing, some come back, some don't." The Faith Hope Love charity said it was currently helping a woman who had been trafficked to England and deported to Odessa.

Kalemi's daughter, 16, vanished three years ago from a school in a city along the Black Sea coast. She still hasn't been found. "A man at her school was convicted of being involved in selling kids abroad," she said. She fears the worst. Kostin said people had been abducted walking to the local shop. "Nobody knows where they have gone."

An entry into this market in women is available to any foreigner who turns up. On arrival in the city, an Armenian taxi driver asked whether I was interested in "meeting girls". I suggested I was, but only those prepared to come and work in London. Within an hour a lady called Olga rang to say she had found someone suitable. Instructions were texted to wait outside the Steakhouse restaurant in Deribasovskaya Street at 7.30pm. Leysa, a 25-year-old from Odessa's satellite port of Kryzhanivka, appeared on time. She was extremely shy; when we met she curtsied and blushed. She had a good job as an accountant, but wanted to leave Ukraine. Her heart was set on a life in London. I promised her that I had good business contacts and would be able to find her work. I didn't specify what work, and Leysa didn't ask me for any documentation. But she looked impressed: "I hope I can come to London. It was my pleasure to meet you."

The following day, in a small room just off Deribasovskaya Street, I handed €35 to a middle-aged woman offering "Odessa brides". She promised to find a woman, not necessarily for marriage, but willing to work in London. Instructed to wait opposite a McDonald's restaurant, Olena appeared on cue six hours later. She was 27, from the north of the city. Shy and bespectacled, the university-educated accountant said she was bored with Odessa, sick of the corruption. She agreed to apply for a visa, delighted by an offer that her flight would be paid and that she would be picked up at Heathrow airport and given a job. "I am very happy," she smiled. "It has always been my hope to work in the UK."

Both Leysa and Olena were highly educated and had attended Odessa National University. Both too had decent jobs, further challenging the perception that those vulnerable to trafficking were without prospects or already mired in the sex trade. Both could have been in danger but didn't seem to know it. Maybe they did and had accepted the risk.

The reservoir of women desperate to escape Odessa appeared limitless. In a dark office behind Deribasovskaya Street, in which the desk was decorated with a towel adorned with London landmarks, a man called Vladimir apologised for having the smallest business of its kind in the city. He had on his books 200 women aged 18 to 50 who he said were looking for a new life in the UK. Later I was told it was "no problem" to acquire a false passport for a woman. "Women are given false papers," said Svystun. "When they are trafficked their false papers are taken away. It's as if they never existed."

David Cameron has declared that he wants to make Britain a "world leader" in tackling trafficking. But there will be no mention in the forthcoming anti-trafficking review of moves to target the trade from Odessa.

Similarly, there are no plans to develop a bilateral policing strategy with Ukraine to tackle traffickers, despite evidence from neighbouring Romania that this approach works. Operation Golf succeeded in dismantling a massive Romanian child trafficking operation in London last year. But that was a one-off. Charities in Odessa say UK police have never contacted them.

In Tamozhennaya Square at close to midnight, the throng of women is ever greater. A van stops, the crowd surges forward and the girls begin lining up for inspection. Some look barely 14. Behind the windscreen the driver can be seen pointing, the mama beckons over a tiny girl in shorts. The square is busier than ever. It's high season in Odessa and for some of the young women on the city's streets, the next stop will be a massage parlour in the UK.