By 10pm, the aptly named Bar Street is pulsating with tourists drawn to Siem Reap by the famous Cambodian ruins of Angkor Wat. As hip-hop blares from clubs, children playing traditional instruments are led along by men with placards reading: "Support our orphans." The kids offer sweet smiles to the diners and drinkers and anyone making a donation is invited to visit the nearby orphanage, one of several in the city, and perhaps spend time working there.

This is the most direct attempt to lure tourists, seducing them with wide eyes and heart-wrenching stories of abandonment. Other orphanages rely on websites filled with pictures of happy children. Some have hooked up with guest-houses, taxi drivers and, best of all, western tour companies that offer voluntary work alongside the holiday of a lifetime.

But behind those smiles can lie untold misery. For in Cambodia, as in other parts of the globe, orphanages are a booming business trading on guilt. Some are even said to be kept deliberately squalid. Westerners take pity on the children and end up creating a grotesque market that capitalises on their concerns. This is the dark side of our desire to help the developing world.

Look again at those cute children. Those "orphans" might have been bought from impoverished parents, coerced from loving families or simply rented for the night. An official study found just a quarter of children in these so-called orphanages have actually lost both parents. And these private ventures are proliferating fast: the numbers increased by 65% in just three years.

Once again, clumsy attempts to do good end up harming communities we want to help. We have seen it with foreign aid, corrosive in so many countries by propping up despots, fostering corruption and destroying local enterprises. We have seen it with the dumping of cheap food and clothes, devastating industries and encouraging a dependency culture. And now we see it with "voluntourism", the fastest-growing sector of one of the fastest-growing industries on the planet.

Insiders call them guilt trips. All those teenagers heading off on gap years, fired up with enthusiasm. Those middle-aged professionals spending a small fortune to give something back to society. And those new retirees determined to spend their downtime spreading a little happiness.

Now the flipside of these well-intentioned dreams has been laid bare in an incendiary report by South African and British academics which focuses on "Aids orphan tourism" in southern Africa, but challenges many cherished beliefs.

The study reveals that short-term volunteer projects can do more harm than good. Wealthy tourists prevent local workers from getting much-needed jobs, especially when they pay to volunteer; hard-pressed institutions waste time looking after them and money upgrading facilities; and abused or abandoned children form emotional attachments to the visitors, who increase their trauma by disappearing back home. "The more I delved into it, the more disturbing I found it," said Amy Norman, one of the researchers.

Development charities offering professionals the chance to use skills abroad have raised similar concerns; Voluntary Service Overseas even condemned this burgeoning industry as a new form of colonialism. VSO asked what right unqualified British teenagers had to impose their desire to do good at schools in developing countries. And Norman is correct: the more you look below the surface, the more these trips raise profound questions about misplaced idealism and misconceived attitudes.

In recent years, a disturbing form of slum tourism has taken off, with rich visitors sold a glimpse into the lives of the very poor. In Asia, unbelievably, tourists pay for trips to hand out food to impoverished rural families. In Africa, tour firms throw in a visit to an orphanage alongside a few days on the beach or watching wild animals. Critics argue that dropping in to take photographs of orphaned children, who may have seen parents recently waste to death, reduces them to the status of lions and zebras on the veld.

Many orphanages let tourists work with children. But what would we say if unchecked foreigners went into our children's homes to cuddle and care for the kids? We would be shocked, so why should standards be lowered in the developing world? Yes, resources might be in short supply, but just as here, experts want children in the family environment or fostered in loving homes, not in the exploding number of substandard institutions.

As the authors of this report point out, the harsh truth is that "voluntourism" is more about the self-fulfilment of westerners than the needs of developing nations. Perhaps this is unsurprising in a world in which Madonna thinks it is fine to take children from African families.

In Ghana, just as in South Africa and Cambodia, there has been a boom in unregistered orphanages. Last year, police investigated one after the rape of an eight-month-old boy and discovered 27 of the 32 children were not orphans. A government study found up to 90% of the estimated 4,500 children in orphanages had at least one parent and only eight of the 148 orphanages were licensed. Unicef officials said children's welfare was secondary to profits and it is thought less than one-third of income goes on child care.

Too many travellers carry a naively romantic idea of doing good alongside their luggage. "Unfortunately, they are led by their hearts and not their heads and unknowingly support environments that may be abusive to children," said Mark Turgesen, international co-ordinator of ChildSafe Network, which protects children from abuse. Last month, the British owner of an orphanage near Siem Reap was charged with sexual assault of a teenage boy; up to 100 children were moved to a safe house by investigators.

Inevitably, the needs of impoverished communities are subverted by the demands of wealthy visitors. Alexia Nestora ran the North American arm of a major "voluntourism" group and admitted such firms loved orphanage stops. "They sell the best and are the most tearjerking projects to pitch to the media. Volunteers come away with the classic picture with an orphan and tell all their friends about their experience – as a business person I loved this." However, she started to question their validity once she went into the field and discovered the work carried out by volunteers was often unnecessary, as admitted by organisers. "The funding they bring with them is the attractive part."

The desire to engage with the world is laudable, as is the desire to volunteer. But we need to tread more carefully. Unless we have time and transferable skills, we might do better to travel, trade and spend money in developing countries. The rapid growth of "voluntourism" is like the rapid growth of the aid industry: salving our own consciences without fully examining the consequences for the people we seek to help. All too often, our heartfelt efforts to help only make matters worse.