Teachers who spot plagiarism in coursework do not need to report the incident to the exam board, official rules say.
It is up to the school or college whether to take disciplinary action, says the Joint Council for Qualifications.
Teachers and pupils have to sign a declaration to say that the candidate's work is their own and schools only have to report plagiarism if it is discovered after the work has been signed off.
Some teachers are unhappy with the rules. One told the TES staffroom that she had spent three hours identifying plagiarism sources on just one pupil's GCSE essay.
She said she expected the student would get a "slap round the wrist" and that she would have to come up with another essay title for her and then mark it.
The teacher said that, trying to find all the plagiarised references in the essay, she discovered that the Year 10 pupil had used at least five websites and cut and pasted paragraphs.
It is virtually impossible to tell how prevalent cheating by pupils and their teachers is.
Ken Boston, chief executive of the Qualifications and Curriculum Authority, admitted this month that he did not know how many students were cheating at GCSE and A-level.
Figures from England's exam boards offer some clue as to minimum numbers.
They show that a total of 695 candidates were found guilty of collusion and 227 of plagiarism last year. The three major boards carried out 125 investigations involving teacher malpractice last year, though not all of these probes covered coursework.
The QCA launched an inquiry more than a year ago into cheating and other issues surrounding coursework. A report is due by the autumn.
Opportunities for pupils to plagiarise other students' work appear to be widespread. Several websites offer the chance to swap essays. One of the most popular, Coursework.info, is run by a company set up by Charlie Delingpole, a Cambridge university undergraduate and former Malvern college student.
For a pound;10 monthly fee, or three essays of their own, the site boasts that visitors get access to more than 63,000 essays.
The firm, Student Media Services, also runs sites offering undergraduate essays and a database of students' personal statements for their university applications. It made pound;121,556 profit in 2003-4, its abbreviated accounts reveal. The company said most of its income came from advertising.
The QCA said it had no powers to take action against such firms as its legal function was to regulate exam boards.
Exam boards are so concerned about teachers signing off pupils' work as original, even when there has clearly been collusion, that they have warned against it in several annual reports on subjects.
However, much of the evidence is bound to be anecdotal. Part of the problem is the difficulty of teachers speaking out if they come across "institutionalised cheating".
Although evidence from the TES staffroom must be treated with care, the frequency with which the subject comes up suggests the issue deserves attention.
Quotes on the website include: "I know my school is cheating on GCSE grades" and "cheating is widespread - so why no action?".
Contributors have given specific examples varying from complaints that pupils are allowed to get away with plagiarism without being punished to school management completing assignments for pupils.
The staffroom is also packed with teachers expressing surprise and outrage that this happens. No one is suggesting that the vast majority of staff are not honest.
Yet with so much pressure on schools to improve their academic results, and many staff also struggling to find the time to mark coursework, it would be surprising if some teachers were not tempted to bend the rules, or at least overlook malpractice.