The government has requested that online auction site eBay remove tickets for BBC Radio 1's Big Weekend event.
The 35,000 free tickets for the two day music festival near Preston were allocated by ballot.
But tickets have appeared on eBay for up to £400 a pair, with some listings detailing how to evade ID checks.
Creative Industries Minister Shaun Woodward said profiteering from the event was unacceptable. EBay has said it is investigating the matter.
Mr Woodward said:"This flies in the face of all the hard work that Radio One is putting in to stamping out touts at the Big Weekend.
"Ebay should stop selling the tickets - the artists are not making money from this free event, so why should the touts?
"Demand for this event is outstripping supply by more than ten to one, and the BBC has decided that people should get tickets on the basis of how lucky they are, not how much money they have," added the minister.
The Scissor Sisters, Razorlight and Kaiser Chiefs are headlining the concerts, which take place on 19 and 20 May.
Minister promises action after Big Weekend ticket dispute
17.May.07 12:27pm
The British Government have announced today (May 17) that they will beef up measures to protect gig goers from ticket touts.
Creative Industries Minister Shaun Woodward MP has decided that "big events" will get protection from people selling on tickets, after online auction site eBay refused to stop listing tickets for this weekend's (May 19-20) Radio 1 Big Weekend event in Preston.
This comes against a background of persistent calls from the music industry and the Stamp Out The Touts campaign, led by NME, calling for action against online touting after fans objected to the high prices being charged.
Tickets for the event are free, and the terms and conditions stated only those who registered for the bash can use the tickets - they are all barcoded and punters need to bring ID.
Woodwardwrote to the auction site at the beginning of the week objecting to the sales, but after eBay refused to remove the tickets he has now declared his intention to act.
"I'm very upset that eBay doesn't realise the moral issue that lies here," the minister explained. "eBay is being asked not to help people do something that may well leave them out of pocket and very, very angry. The pubic feels very strongly about ticket touting so I will now look at other options of reducing the problem."
The government says it will now look to protect big UK events.
They stated they will "convene a meeting of experts behind big events in the UK to decide which music and sporting events should be protected from touts".
In return, the selected events will have to use security measures like One Big Weekend to try to prevent online reselling, and they must all have a returns policy.
Meanwhile the Department of Media, Culture And Sport added they would "come to an agreement with eBay that they will not facilitate the sale of these tickets" but warned that if the auctioneer didn't sign-up voluntarily they would "look into what sanctions or regulations are needed".
eBay however told NME.COM that they did not feel this particular event should be removed from their site.
"Whilst it is perfectly legal to sell concert tickets, eBay has in the past banned tickets to certain events that have been unique and commemorative in nature, such as the concert for Diana," a spokesperson explained.
"Radio 1 approached us on the day the tickets were being issued and we explained then why we didn't feel a ban would be justified on this occasion. While we have previously banned tickets on the basis that an event is unique or commemorative in nature, we did not feel that a Radio 1 roadshow was of a similar nature to qualify for a ban on our site."
However they added that they would be prepared to meet with the government over the issue, explaining: "We have offered to meet with the minister to discuss the issues surrounding events of this nature and remain committed to working with the Government to improve the secondary ticket market."
A government minister has attacked eBay for failing to withdraw music festival tickets being traded on the website.
Music minister Shaun Woodward criticised the website owners after they refused to pull the free tickets for the BBC Big Weekend show which were being sold for about £50 each.
The minister has twice written to eBay calling for them to stop allowing the sales but the company has refused.
A spokeswoman for the MP said: Not only is eBay ignoring the BBC's terms and conditions that these free tickets are not for resale, it is permitting people to engage in fraudulent activity by supplying and using ID to pass themselves off as someone else in order to gain entry to the Big Weekend."
Organisers introduced ID checks for festival-goers in a bid to combat touts but many sellers now offer fake identity paperwork to help buyers get through security.
Radio 1 held a ballot to give away 30,000 tickets to the massive two-day music festival to be held at Moor Park, Preston, this weekend.
Tens of thousands of fans applied for tickets during the one-week registration period.
A BBC spokesman said: "Radio 1 does not condone anyone selling on its tickets via sites such as eBay."
An eBay spokesman said: "While we have previously banned tickets on the basis that an event is unique or commemorative in nature, we did not feel that a Radio 1 roadshow was of a similar nature to qualify for a ban."