The boost in profits came after the company this week welcomed the Government’s decision not to completely ban smoking in pubs and clubs.

A spokesman for BAT said: "A total ban is unnecessary and out of tune with public opinion. People who smoke are taxpayers and voters who feel very strongly about social exclusion."

The company said that a recent "virtual ban on indoor public smoking" in Italy had resulted in a total market decline of 6 per cent, leading to lower profits and sales.

The like-for-like figures strip out the one-off £1.4 billion gain from the merger of BAT with RJ Reynolds and the sale of Etrina last year. Taking those factors into account, profits were down 43 per cent, from £3.2 billion in 2004.

Jan du Plessis, BAT’s chairman, said it was on track for "a highly satisfactory year"

The company, which makes the Lucky Strike, Kent, Dunhill and Pall Mall brands of cigarette, highlighted strong performances in Russia, Turkey, Pakistan and Bangladesh and difficulties in Canada and Japan.

It welcomed a decision by the British government on Wednesday to stop short of introducing a complete ban on smoking in public places in England and Wales.

BAT said its four global brands continued to improve their growth rate, increasing volume by 9 percent as a whole.

On a like-for-like basis, the star performers continued to be Kent in Russia and Romania, along with Pall Mall in Germany and Hungary," BAT said.

The shares edged up 2p at 1,197p in early deals. The shares have risen by around a third this year as investors welcomed the merger of its US arm with RJ Reynolds in July 2004. To track the stock click here.

Patricia Hewitt, the Health Secretary, said earlier this week that the Health Improvement Bill would ban smoking in restaurants and bars where food is served but that private members’ clubs will be exempt and pubs not serving food will be allowed to choose whether to continue to allow smoking or not.

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