Thousands of counterfeit DVDs, including recent releases The Bourne Ultimatum and the fifth Harry Potter film were in the haul.

Durham County Council Trading Standards led the raids on two properties in Peterlee and Horden.

Two women and a man were arrested, with officials saying more may follow.

Police and officials from the Entertainment Leisure Software Publishers Association (Elspa) joined the raids.

As well as computer equipment used to produce the pirate copies, other fake goods recovered in the raid included Nintendo Wii and Xbox computer games.

'Black economy'

From one address alone, more than 1,000 film titles and 900 music CDs were seized with a street value of �200,000.

Peter Fleming, Durham County Council's assistant head of trading standards, said: "Film, music and computer software piracy costs industry millions in lost sales each year, threatening jobs and future product development.

"Sellers of counterfeit goods operate as part of the black economy, evading taxes and making money from stealing the property, reputation and ideas of others.

"Prosecution through the courts can lead to hefty fines and even imprisonment.

"We will continue to work with the police and industry representatives to clampdown on this area of criminal activity."