Children as young as 11 are being exploited by gangs running "county lines" drug networks, MPs have heard.
The National Crime Agency (NCA) said there had been a rapid rise of "county lines", where city-based gangs exploit people to sell drugs in smaller towns.
It told the Commons Home Affairs Committee that more than 2,000 phone lines are being operated by gangs across the UK - up from 720 a year ago.
Twenty-three police force areas were now involved, the NCA said.
Most of the vulnerable people exploited were children aged 15-17.
"County lines" is a tactic whereby gangs in places such as London, Liverpool and Birmingham introduce untraceable phones to a different area to sell drugs at street level. Local runners - often teenagers - are used to transport the drugs.
Nikki Holland, director of investigations at the NCA, told MPs that the latest assessment showed law enforcement agencies had "greater awareness" of the problem.
But she warned that the issue had spread from London, the West Midlands and Merseyside to involve more than half of the UK's police force areas.
In an annual report on the issue, the NCA said that data from last year showed that victims were younger than previously identified, with ages ranging between 11 and 56.
Gangs establish contact and build relationships before the exploitation takes place, so some may have been approached at an even younger age, the NCA said.
They targeted children with backgrounds of poverty, family breakdown, exclusion from school or behavioural and developmental disorders, the agency said, but children of "seemingly stable backgrounds" were also exploited.
Profits of more than £800,000 can be generated from an individual phone number, known as a "deal line", according to the NCA.
Mass marketing text messages are used to advertise drugs along with two-for-one deals and free samples offered in exchange for the contact details of potential customers, the report said.
The NCA also identified an "emerging trend" of using app-based taxi services to transport gang members and potential victims of exploitation.
After a week of raids, police said that 600 people have been arrested and over 140 weapons seized, including 12 firearms, swords, machetes, axes and knives.
Police referred 40 people as potential victims of human trafficking or modern slavery and discovered 400 vulnerable adults and 600 children in need of support.
In a statement, Ms Holland said: "We know that criminal networks use high levels of violence, exploitation and abuse to ensure compliance from the vulnerable people they employ to do the day-to-day drug supply activity."
She said law enforcement agencies aimed "disrupt their activity and take away their assets" to block the cash flow of organised crime groups.
Children aged between 15 and 17 were the majority of those exploited in county lines, with both boys and girls involved, the NCA said.
It said the "grooming techniques" were similar to "child sexual exploitation and abuse", with gifts and attention as well as threats of violence.