Two of Britain's leading free-market thinktanks have been criticised for taking money from "big tobacco". The Adam Smith Institute (ASI) and the Institute of Economic Affairs (IEA) have received tens of thousands of pounds in funding from leading tobacco companies.

Their admissions have dismayed health groups, which question the degree to which both organisations have influenced government thinking, especially on plain packaging for cigarettes. It also highlights the entrenched links between "big tobacco" and the libertarian strand of British politics that has been strengthened by the recent rise of Ukip, a party that has positioned itself firmly on the side of smokers.

Both thinktanks have criticised plans to force retailers to sell cigarettes in unbranded cartons, an initiative that cancer charities claim will curb smoking among the young, but which was recently abandoned by the government. They have also criticised anti-tobacco measures such as the ban on smoking in pubs, arguing that they represent an attack on civil liberties.

However, news that they have been receiving tobacco money has raised questions about whether World Health Organisation (WHO) guidelines governing transparency on tobacco funding are being breached. British American Tobacco, the company behind brands such as Lucky Strike and Dunhill, has confirmed that in 2011 it gave the IEA £10,000, plus £1,000 in event sponsorship. Last year it donated a further £20,000 to the institute.

The ASI confirmed that 3% of its funding came from tobacco firms, although it declined to reveal how much. It said that it had a policy of capping private donations, although a spokesman declined to reveal the level of the cap.

However, company accounts reveal that Adam Smith Services Ltd had an income of just under £750,000 in 2011, the latest year available, which suggests that it received around £24,000 from "big tobacco" [see footnote].

"At the current time, with a centre-right government, thinktanks which represent the libertarian right wing like the IEA and ASI are crucial players in the development of public policy," said Deborah Arnott, chief executive of smoking-related health charity Ash.

"The government needs to take note that tobacco industry funding of such organisations completely undermines the credibility of their opposition to standard packaging," she added. "For the government to allow its policies to be influenced by tobacco-funded think-tanks would be a breach of its legal obligations under the WHO tobacco treaty."

A spokesman for Marlboro manufacturer Philip Morris International said: "We confirm that we are a member of the Institute of Economic Affairs, but cannot provide you with any further details."

Both JTI, which makes Camel, and Imperial, whose brands include Embassy, staunchly defended their donations to the thinktanks. "We believe the contributions of organisations like the ASI and the IEA are very valuable in an open and free society. We respect their work and share their views on many issues," said a spokesman for Imperial.

In a statement JTI said: "We work with the Institute of Economic Affairs and the Adam Smith Institute as their economic and behavioural expertise help us better understand which tobacco regulation measures will work and which will not."

For years critics of the tobacco industry have questioned whether the two thinktanks receive funding from cigarette companies. Tobacco Tactics, part of the Tobacco Control Research Group at the University of Bath, notes that both thinktanks took part in a series of debates organised by the pro-tobacco pressure group Forest in June 2011. It also reported that in March 2011 Eamonn Butler, the ASI's director, was one of a number of signatories to a letter to the Daily Telegraph attacking the government's position on tobacco control.

The ASI was part of a coalition that sought to overturn the smoking ban in pubs and published a report written by a pro-smoking blogger attacking the introduction of plain packaging with "no solid evidence of its efficacy or unintended consequences".

The IEA's director, Mark Littlewood, has called the plan to introduce plain packaging, the "latest ludicrous move in the unending, ceaseless, bullying war against those who choose to produce and consume tobacco".

Defence of the tobacco industry by Littlewood, who is an independent business adviser to the government, prompted questions to be asked of the coalition.

The business secretary, Vince Cable, was forced to rebut claims that Littlewood was open to a charge of a conflict of interest, saying he had no role in tobacco-related matters.

The IEA, which did not respond to requests for comment, has never confirmed whether it receives tobacco money. "If the IEA really believes its policies are completely independent from its funding, it should have the courage of its convictions and be honest about where it gets its money from," Arnott said.

• This footnote was appended on 6 June 2013. We have been asked to make it clear that the Adam Smith Institute received £13,000 from tobacco companies, but stress that none went to Adam Smith Services Ltd, which has nothing to do with the institute.