The big holiday companies have flooded the high street with offers of half-price holidays, free child places and cut-price insurance in their annual bid to kickstart bookings for the summer. First Choice's current 'Buy One Get One Free' campaign is just one example, with prices starting from £128 for a week's holiday in Corfu. But for every discount poster there is a story in the media warning that these deals really are too good to be true. So are there any real savings to be made by booking now or should those in search of some cheap summer sunshine hold tight for last-minute deals?

Trading standards officer Bruce Treloar said the main pitfall to watch out for when shopping for new year bargains is prices which have been inflated just before Christmas to make the January discounts seem juicier. For example, a seven-night Tenerife holiday advertised in Airtours' second edition summer sun brochure quotes an adult price of £619, a child price of £159 and a flight supplement of £42 to fly from Manchester. By the time the third edition came out in November, prices for the same holiday had jumped to £719, £299 and £64 respectively. The current offer of £50 off adult prices does not seem so generous when seen in this light.

Airtours is not the only tour operator to employ this practice and the Institute of Trading Standards will be keeping a close eye on discount strategies over the next few weeks to ensure operators do not breach trading regulations.

Club Travel 2000 marketing director Andy Loynes said: 'Operators use a variety of tricks to confuse people. Many of these 50 per cent discounts apply to the adult price but the child price and the flight supplement may have doubled.'

Operators and travel agents defend their discounting policy by explaining that the travel industry is ruled by the laws of supply and demand and prices must fluctuate accordingly. Thomas Cook commercial director Mike Beaumont said that many holidays were in fact being sold at lower prices than last year. A two-week holiday in Majorca which cost £350 last January is this year being sold for £217.50, he claimed.

His advice for families who want to take advantage of free child places or who know where they want to stay is to book now. Operators have cut back on capacity this year so there is unlikely to be a glut of late availability or bargains in peak summer months. The poor winter weather has also generated a surge of early bookings for summer holidays, with Cyprus, Greece, Cancun and Florida emerging as hotspots.

Avoiding the discount pitfalls

• Shop around. Many of the big tour operators are selling identical holidays. If you can't get the discount being advertised, go somewhere else.

• Don't take discounts at face value. Ignore the percentages, look at the price. Is there a brochure showing the holiday at its original price? Legally tour operators can only discount a price that has been held for a period of 28 days in the previous six months. In practice, this is difficult to check as agents will remove old brochures from the shelves but if you have doubts contact your local trading standards officer.

• Watch out for hidden extras such as under-occupancy surcharges, or supplements for regional departures.

• Read the small print: most deals come with date and departure restrictions.

• Remember it is illegal for a holiday company to insist you purchase insurance in order to receive a holiday discount.