The City of Vancouver is proposing a crackdown on brothels that are masquerading as massage parlours.

A draft plan from the community services group proposes the creation of a new licensing system designed to improve communication between police and city inspectors in order to help close illegal sex trade businesses and end hidden exploitation.

Vancouver Coun. Kerry Jang said the proposed action plan would streamline city staff's ability to inspect, monitor and even close questionable or illegal businesses.

"It's designed to enable police and inspection staff to respond to complaints about problem premises quicker as well as managing and regulating what kind of businesses go where; how to do the inspection; what to look for when uncovering illegal sex acts; and to make sure businesses don't become fronts for illegal activity," Jang said.

City staff estimate there are between 1,000 and 2,000 people selling sex on the street, while an estimated 4,000 to 8,000 are working inside, often through businesses such as escort services and illegal massage parlours.

The city's present efforts to regulate the sex trade through policing and outreach costs about $2 million a year.

But the outlined plan flies in the face of an Ontario Superior Court decision made last year, which stated that Canada's Criminal Code provisions relating to prostitution contributed to the danger faced by sex trade workers.

In her ruling, Justice Susan Himel said laws against keeping a brothel force workers from the safety of a controlled environment to face violence on the street.

Katrina Pacey, a lawyer and a director with Vancouver's Pivot Legal Society, said there is already a strained history between police and sex trade workers, and new punitive laws just make it more difficult for victims to come forward.

"Instead of increasing enforcement powers and inspection powers, why not invite sex workers to tell us what they need the City to do so they can access protection when they need it — instead of charging in with a warrant?"

In its plan, the City said it doesn't want to force the sex trade underground, but wants women and men to know that if they do want out, there are options available.

The report will be presented to city council next Thursday.

With files from the CBC's Leah Hendry