More than one in every 10 banknotes in circulation in Britain is contaminated with cocaine, police drug experts have said.

An official inquiry into the use of cocaine carried out by the Home Office's advisory council for the misuse of drugs (ACMD) has been told that 11% of banknotes in general circulation test positive for traces of cocaine, against 4% in 2005.

The finding, based on regular testing by 15 police forces, reinforces surveys that show use of cocaine powder in Britain is the highest in Europe, and is above levels seen in the US and Australia. Police experts told the first evidence session of the delayed ACMD inquiry on Thursdaythat cocaine now being sold on the streets and in clubs was being cut with MDMA (methylenedioxymethamphetamine) – the active ingredient in ecstasy.

They suggested longer pub hours since 2006 may have contributed to the rise, as cocaine powder is widely used by 20-something men on a night out to carry on drinking without falling asleep.

Detective Chief Inspector Trevor Williamson, the drugs co-ordinator for the Association of Chief Police Officers, told the hearing police officers on the street believed there was a direct link between cocaine use, alcohol consumption and a rise in violence, although the academic evidence was more tentative.

He said there were anecdotal reports of groups of young men for a night out on the town using powder cocaine to block out some of the effects of alcohol so they could carry on drinking – bluntly to help them stay awake.

PC Adrian Parsons, a Kent police drugs expert, said that the use of ketamine, a powerful horse tranquilliser, and a more potent form of ecstasy were on the rise, but cocaine "we see all over the place".

He said the typical user was a white male, aged 18 to 45, and part of the pub/club drinking night-time economy. The people he most often stopped following a positive palm swab on his scanning machine at nightclub doors were working, had their own homes, and no previous convictions. They would most likely end up sent home with a caution for possession.

"You can spot people in the queue who when they get to me its 'game on' that they will provide a positive sample," said Parsons. "They are louder than normal people. They are non-stop talkers. They are arrogant and feel invincible. They are happy to ridicule bystanders who are not part of their group, particularly police officers. They are jaw-clenching, sweaty, with clammy skin. They are extremely paranoid, especially if you try to look up their nose, and have eyes the size of saucers. These are the symptoms we teach police officers to look for."

He said cocaine use was widespread across all financial and class levels. "Gone are the days of the 1980s when it was just champagne charlies in the City. That's out of the window now."

The inquiry heard cocaine was most commonly sold in £20 or £30 deals for 0.4 grams or 0.6 grams with a purity of between 15% to 30%, and profit margins on cocaine cut with other substances were now growing extremely large. A kilo of 75% pure cocaine powder would be bought in at £52,000 and sold on at £1,500 an ounce to make a profit of £54,000. But if that was "bulked out or bashed" to make 106 ounces of cocaine that would sell for £1,000 each that would make £106,000 – double the profit.

In turn, an ounce of 25% pure cocaine bought for £1,000 could be "bulked out" to 47 grams of 15% purity to sell for £1,880 an ounce. "There is a lot of money in it," said Parsons, adding profits often financed human trafficking and other organised crime.