The state government will release a discussion paper this month on Tasmania's sex industry laws after years of debate that the 2005 criminalisation of brothels made sex workers vulnerable to exploitation.

The Swedish Government has long criticised developed countries where prostitution is legal, arguing that its legal status generates underground demand for sex trafficking and allows unscrupulous operators to work girls up to 18 hours a day, earning them as much money as possible.

Scarlet Alliance Tasmanian spokeswoman Jade Barker has denied that Australia's regulation of its sex industry made it vulnerable to sex traffickers though the claim was disputed by a Tasmanian counsellor who deals with abused women daily.

``I don't think it is realistic to believe that (sex trafficking) doesn't happen here when there is evidence to suggest that it is a very widespread - if difficult to identify - practice in Australia and worldwide,'' Launceston's Laurel House senior counsellor Rachel Portsmouth said.

``I am not aware of any particular characteristics of Tasmania that make it a more or less appealing hot spot although any island has geographical and social features that allow some crimes to more easily flourish whilst discouraging some others.''

In announcing more funding for the Australian Red Cross's Support for Victims of People Trafficking program last February, Women's Minister Kate Ellis said 83 per cent of trafficking victims identified in Australia were women working in the sex industry.

This followed statistics from a 2004 parliamentary inquiry into sexual servitude that found between 300 and 1000 women were trafficked to Australia for sexual servitude each year.

The Australian Federal Police from 2003 has investigated 305 cases of sexual servitude, rescuing 184 victims.

In most cases, these women had been working in the sex industry to pay off debts between $15,000 and $40,000 for coming to Australia.

The Australian Crime Commission reported in 2006 that deceptive contractual practices were increasing among women in prostitution where some had come to the country to study and instead found themselves working in brothels.

Ms Barker said it was important that debt-bonded prostitution, although a human rights issue, was distinguished from sex trafficking.

``There is a confusion around what is sexual servitude,'' she said.

``There are situations where people do accept bondage agreements where they've come to Australia, not knowing it is legal for sex workers to get a work visa here if the state you are going to has a legal sex industry.''

``In debt-bonded agreements, they fully understand that they will be participating in sex work so they are not being trafficked.

``It is unfair that they enter into such agreements, and would be in any job, but it is not as if they didn't know what they were coming here to do.''

Ms Barker said in the last nine years, there had been only two convictions concerning sex trafficking.

From 2005, there have been five convictions concerning sex servitude.