It is an unlikely setting for an international book fair. But around this time of year, the spacious prayer halls of Tehran’s gigantic Mosalla Grand Mosque are transformed into a labyrinth of stalls occupied by publishers exhibiting their latest titles.

Offering generous discounts, some sell more books in 10 days than in the rest of the year. The fair attracts nearly 5 million visitors, dwarfing international counterparts such as Frankfurt.

All the books on display have been vetted before publication and some heavily censored, as is routine for every book printed in Iran. Visiting the fair this week the supreme leader, Ayatollah Ali Khamenei, received a copy of Henry Kissinger’s On China in Farsi as a gift. Also on display is the Farsi translation of Hillary Clinton’s memoir, Hard Choices.

In parallel, however, is an unofficial Iranian book fair. It is online and free from the shackles of censorship that dominate the traditional publishing in Iran.

Iran is among the top 10 most censored countries, next to Saudi Arabia, Azerbaijan and China. However, the digital age is creating a new challenge to Iran’s censorship apparatus. An increasing number of writers and translators are turning to the internet to publish their work, instead of going through the tormenting line-by-line scrutiny required for print publication. A rise in paper prices has concomitantly driven more readers to buy ebooks. State TV has started labelling digital books as a new threat that should be taken seriously.

The ministry of culture and Islamic guidance is in charge of checking books. Anonymous censors, whose job is given the polite Persian word momayezi (evaluating), work round-the-clock to examine texts for anything that could be considered obscene, inappropriate or politically unacceptable. They are masters of finding a needle in a haystack yet no one knows who they are.Some censors are notorious for their “Ctrl+F” approach, the computer function that allows them to search for and delete blacklisted words such as kiss, dance, pork and wine. Others read books in full, not allowing anything to slip through.

But now there are digital alternatives to the old ways. Nogaam, an online Iranian publishing house, helps writers publish their work as ebooks that can be downloaded from Google Books or the publisher’s website.

Its editor, Azadeh Iravani, said it had published 25 titles since 2013, mostly by authors who are living in Iran and know they have no chance of making it into print due to censorship. It is not clear what, if any, penalties writers could face for online publishing deemed unacceptable.

“If you’re in Iran and your book is rejected or censored to the bone then you had to either bin it or put it in a shelf to gather dust. So online publishers like Nogaam are giving people a new choice,” she said.

Among Nogaam’s books is a poetry collection by Payam Feili, who is openly gay. Titles are crowdfunded. Once the author is compensated, the book is available free for download.

They are also available in ePub format, readable on many book apps. A book by the satirist Ebrahim Nabavi has been downloaded at least 10,000 times. “It gives you a good experience of reading, it’s not like the old-fashioned scanned books that people could not read,” Iravani said.

James Marchant, the lead researcher behind a forthcoming report by the London-based Small Media on book publishing in Iran, called Writer’s Block, said with internet and smartphone penetration rates growing rapidly in Iran there was enormous potential for e-publishing to revolutionise the Iranian book market.

“E-publishing in Iran is still in its infancy, and there remains a fair amount of scepticism among writers and publishers as to its potential benefits. Despite this uncertainty, diaspora organisations and self-publishing authors inside the country are starting to find some success marketing ebooks,” he said.

“There have been reports of self-published authors selling more than 10,000 copies of their books online, while diaspora publishers such as Nogaam are helping to share banned books with Iranian readers via e-pub formats.”

In the words of Ali Asghar Ramezanpour, a former cultural ministry official, online publishing is “growing, and underground publishers are very active”.

Mahmoud Dowlatabadi, Iran’s most celebrated living writer, said restrictions had eased since Hassan Rouhani came to power but censorship still existed. However, he said the priority of Iran’s intellectual community was to help Rouhani bring Iran out of its international isolation.

“The situation has got much better but I still have many books that are banned.” Among them is The Colonel, which has been published in English by Haus Publishing.

Reza Shokrollahi from Khabgard, a famous Iranian literary blog, said censors were spending less time scrutinising books, but this did not imply they had become less meticulous. “It appears that censors receive their orders from people outside the ministry because even the minister and the president are critical of their approach.”

In his speech at the opening ceremony of Tehran’s international book fair, Rouhani said censors acted so arbitrarily that a book might get permission for publication for its first run but the second edition of the same book could be listed as banned.

Rouhani’s culture minister, Ali Jannati, said in 2013 that if the “Qu’ran was not sent from God, Iranian censors would have rejected it”. In a recent speech, he admitted that Iran’s policy of filtering the internet or blocking satellite channels had proved futile. “It’s like blocking the entire highway for the violation of a few cars,” he said. “The best way to control public opinion is to go with it not to fight it.”

H&S Media is another firm that specialises in digital distribution and on-demand publishing. Its director, Hossein Setareh, said it had published some 460 Iranian books since 2011, available on Google Books. At least half are also available on Kindle.

“One of the big problems we face is that Amazon and its Kindle reader don’t support Farsi language,” he said. “Also because of international sanctions people in Iran cannot buy our ebooks from Amazon or similar foreign-based sites.”

Setareh’s firm instead has come up with a creative solution: users in Iran can donate a book’s price to a charity of their choice and send its receipt. They will then be allowed to download the book. Every month, at least 300 books are sold to readers in Iran using this method.

Seyedmostafa Raziei, a young writer and translator, is published in print in Iran but has released nine titles as ebooks, four of which are translations of Charles Bukowski’s poetry that could not get permission from the ministry. “Censorship is futile and we are not in the 20th century any more: people have access to the internet and it has no boundaries.”

Fidibo is Iran’s biggest digital library but it features ebooks that have already received permission for publication. Its director, Majid Ghasemi, said it had published nearly 3,500 books online and has more than 150,000 users. Last year alone, books had been downloaded from Fidibo more than 200,000 times. It has its own app available on App Store and Google Play.

“It has been a hugely successful experience,” he said. “We didn’t expect it to become this popular. Last year we estimated to have saved 2,000 trees.”