Lu Libing knew he had only one choice as the birth of his third child approached. He couldn't afford hefty fines that would be meted out by Chinese authorities, so he put the unborn child up for adoption.

On the Internet he found "A Home Where Dreams Come True", a website touted as China's biggest online adoption forum, part of an industry that has been largely unregulated for years.

Expectant couples, unwilling or unable to keep their children, go to the website looking for adoptive parents rather than abort their babies or abandon them.

There are no clear statistics on how many people use these websites but "A Home Where Dreams Come True" said 37,841 babies had been adopted through its website from 2007 to August 2012.

More than 380 babies were rescued and 1,094 people arrested when the government cracked down on the industry last month. Adoption websites such as "A Home Where Dreams Come True", whose founder was arrested, were shut because they were deemed illegal and responsible for the trafficking of babies.

An official with China's state-run adoption agency, the China Centre for Children's Welfare and Adoption, said parents could apply to the civil affairs ministry to give up children.

The official, who declined to be identified, said it was "definitely wrong" to use websites.

"These are children, not commodities," the official said.

Baby trafficking has been a perennial problem in China and recent reports on online trafficking rings show how an underground industry has made use of the Internet to connect people quickly, making it easier to buy and sell babies. This has presented a new challenge for the government.

Demand for such websites has been fuelled by rural poverty, China's one-child policy, limiting most couples of only one child, and desperate, childless couples.

Lu, 30, who asked to use a pseudonym for fear of official retribution, lives on the outskirts of Ganzhou in southern Jiangxi province, a barren place scarred by water contamination and heavy metal pollution.

He and his wife, Mu, live from hand to mouth in a two-bedroom home in an unfinished block. Their two children, aged two-and-a-half and 10 months, live with Lu's parents in northern Shaanxi province.

"SEEKING HONEST FAMILIES"

He says he would have to pay family planning fines of about 50,000 yuan to 80,000 yuan for the third child, more than 10 times his monthly income.

Mu is five months pregnant. Lu wrote on his first post on the website on February 24 that he could not raise the child and was "seeking honest families who are willing to adopt".

The post drew 40 responses. During his interview with Reuters he received a call from a prospective adoptive mother who was worried he may have been arrested after state media reported on the crackdown earlier that day.

Lu said there was no hope of sending the new child to school or paying the necessary fines to secure a "hukou", or household registration. Failure to pay would make his baby an undocumented "black child" with no access to schooling or healthcare.

Baby trafficking has been encouraged by the one-child policy and a traditional bias for sons, who support elderly parents and continue the family name, leading to the abandonment of girls. Even as China starts to relax the one-child policy, allowing millions of families to have a second child, it still penalises people who flout the rules.

Traffickers have often resorted to kidnapping. In late February, state news agency Xinhua warned parents to guard against kidnappers who could pose as nurses in hospitals or lie in wait outside school gates.

The increasing use of websites is changing adoption from what was once a hush-hush process between friends to one where details can be shared anonymously with strangers over the Tencent QQ instant messaging service.

Many Chinese Internet users were outraged after media reports of the crackdown.

Much of the anger was directed at Zhou Daifu, the 27-year-old founder of "A Home Where Dreams Come True". Zhou denied being involved in baby trafficking but acknowledged that traffickers surfed his website.

"Whenever we find suspicious cases of human trafficking, we always tell the police," he told Reuters in December. "But it seems to me that they just don't care."

"GRATITUDE FEES"

Reuters spoke to three "agents" who used Zhou's website to sell children. One, a man who declined to be named and was brokering the adoption of three girls, said he gave several thousand yuan to the birth parents and charged the adoptive parents more than 10,000 yuan.

About 70 percent of the parents giving their babies away asked for 30,000 to 50,000 yuan, Zhou said.

It is unclear whether such parents could face criminal charges. China's Supreme People's Court said selling children for profit constituted trafficking, although accepting "fees for nutrition" and a "gratitude fee" were not illegal.

Yi Yi, a Beijing-based adoption lawyer, believes such websites should be regulated but not banned, saying they meet the needs of a growing population.

Some 10,000 children were abandoned in China every year, said Wang Zhenyao, president of the China Welfare Research Institute at Beijing Normal University. Media reports say many of these are girls and disabled children.

Of 280 posts on "A Home Where Dreams Come True" from July to September 2012, Reuters found that people were giving away 98 baby girls and 61 boys. The others did not indicate a gender.

Some of the parents using the website told Reuters their pregnancies were the result of extra-marital relationships, while others were in a similar position to Lu Libing and his wife.

Lu had initially short-listed three people to adopt his unborn child but said he was leaning towards a housewife in her late 30s. The woman offered to let the child meet his or her birth parents and siblings when the child turns 18, but Lu wasn't sure that was a good idea.

"The child will hate us," he said. "Just think, if he's in his teens and he suddenly finds out that his biological parents are not his current father and mother, how would he feel? I think it would be a huge blow."