CUSTOMS and Border Protection seized more than 125 million cigarettes being illegally brought into the country in 2012.
Laid end to end the cigarettes would stretch from Canberra to Perth and back again.
Combined with loose leaf, more than 134 tonnes of smuggled tobacco was seized at ports all round the country, which potentially would have cost the Australian government more than $128 million in unpaid taxes.
While China has traditionally been the biggest source of illicit cigarettes entering Australia, more recently large shipments have started to arrive from the United Arab Emirates.
Despite last year's hefty haul, the figures also show there has been a 32 per cent drop in the amount of illegally imported tobacco seized.
But general smoking trends may also be contributing to a decline in demand, with 2012 figures showing an ever shrinking number of people taking up the smoking habit.
Customs and Border Protection said increases in penalties, fines and jail time as well as a number of arrests in 2011 and 2012 had contributed to the decrease.
But Cancer Council Victoria manager Kylie Lindorff said prices made illegal cigarettes attractive to smokers.
With government tariffs, a packet of 25 cigarettes costs about $16, while an illegal packet of cigarettes sells for about $10, Ms Lindorff said.
''The main issue with smuggled tobacco is that it's cheaper than in a store. The cheaper the tobacco, the less likely people are to give up and the more they will buy,'' she said.
''Less cheap tobacco is a great thing … as every cigarette is killing you.''
Even so, only about 2 per cent of smokers buy smuggled tobacco and there were fewer Australians smoking last year than ever before in the country's history.
''About 15 per cent of Australians 14 years and over are smoking and that's dropping. And among young people smoking is at its lowest point ever,'' Ms Lindorff said.
She said the decrease showed government programs were working.
''There are increased penalties, there are increased fines so it's not worth people trying to import [tobacco] and demand is less as well because there are less people smoking.
''When people are caught they now face up to 10 years in prison.''
She said an 18-year-old today would not have been alive when smoking was outlawed in workplaces and cinemas.
''Young people today have never been exposed to ads on television or ads on billboards.''