The Chinese-made toys, which have a price tag of 6, have been deemed to be so dangerous that they have been banned from sale throughout Europe.
The laser fitted on the toys has been found to be nearly 20 times more powerful than permitted by toy safety regulations – yet the packaging states the guns are suitable for children from five years of age.
Following a tip-off from a member of the public, trading standards officers from North Yorkshire County Council went to the Sunday market in Catterick and swooped on a stall being run by a trader from Oldham.
A search revealed 10 illegal toy weapons, all of which were seized.
The trading standards officers have launched an investigation to establish the source of the imported guns, which were seized at the market last Sunday. The trader could face prosecution.
The county council's executive member for trading standards, Coun Clare Wood, said: "These are extremely dangerous so-called toys, which could easily have the most horrific consequences. They could, for example, easily damage a child's eyes."
Laboratory tests which were carried out in July this year led to a Europe-wide recall of the guns. The tests showed that the guns pose a risk of damaging a person's sight because they incorporate class 3B lasers.
The black plastic toy gun comes in a yellow box with TD-2007 written in silver on the top. The laser is so powerful that it can blind if shone directly into a person's eyes and there are concerns that the toys could lead to fatal results if fired at motorists or aircraft pilots.
Trading standards officers have warned parents whose children have one of the guns to remove the batteries before calling Consumer Direct on 08454 040506 to report where the item was bought.