Tobacco companies have admitted several breaches of the voluntary agreement not to advertise within 200 metres of schools.
The admission comes as a survey reveals tobacco sponsorship has led young people to associate sports with cigarette brands.
The British Medical Association, the Health Visitors' Association and Action on Smoking and Health have joined forces to attack the voluntary agreements as "a sham and a disgrace".
Further damage to the Government's endorsement of voluntary regulation comes amid growing opposition to the sponsorship of a school in south London by British American Tobacco.
Archbishop Michael Ramsey Church of England school in Southwark will receive Pounds 100,000 from the company. BAT will have four representatives on the school's governing body, although it stresses it will make no attempt to influence the curriculum or pupils' attitudes to smoking.
Julian Palmer, who works at Featherstone high school in Southall, west London, has been monitoring local hoardings. He has complained 12 times of breaches to the Committee for Monitoring Agreements on Tobacco Advertising and Sponsorship, set up to supervise the agreement last year.
In several cases, the committee said, the advertisements were put in the wrong place because the poster distribution company had told the cigarette company the site was more than 200 metres from the nearest school. In answer to another complaint, the committee's secretary, Gill Silverman, said Rizla cigarette papers were "not a tobacco product under the terms of the voluntary agreement".
Mr Palmer said COMATAS always responded quickly and papered over the advertisements, but sometimes they went up again in the same place weeks later. One large hoarding with advertisements for Silk Cut and Marlboro was right opposite the school's entrance.
"The whole idea is that COMATAS is supposed to monitor this agreement and look out for violations, but it just isn't working," he said. "I see lots of violations just in this area and it is obvious the agreement is not being taken seriously."
Clive Turner, director of industrial affairs for the Tobacco Manufacturers' Association, said: "There are thousands of sites all over the country and it would be impractical for tobacco companies to check them all . . . Sometimes mistakes do happen, but there is never any deliberate attempt to break the agreement."
A MORI poll among 4,500 children for ASH and the BMA found that sport and cigarettes were linked in the minds of many young people because of tobacco sponsorship. Such "backdoor advertising" convinces many children that cigarettes are still advertised on television, despite a ban since 1965, the campaigners say.
In the poll 35 per cent of those questioned linked motor racing to cigarette advertising, while 30 per cent said darts were linked to cigarettes, 28 per cent said snooker and 18 per cent cricket.
Sponsorship includes Marlboro and Rothmans being involved with motor racing, and Embassy and Benson and Hedges with snooker.
But the survey undermines efforts to stop young people smoking by using role models including television personalities and pop stars. Only 4 per cent said they would be influenced if someone they admired told them to quit. But four out of ten said they would try to give up if their boy or girlfriend wanted them to stop.
Commenting on the survey, Pamela Furness, chief executive of ASH, said: "If the recent rise in teenage smoking is to be reversed, it is essential that the Government complements its policy on tax with a comprehensive advertising ban."