Figures from the Publishers Association show a 3% increase in digital sales, bringing revenue from e-books and other digital formats to £2.6 billion.
However, physical sales saw a drop of 5% to £3.5 billion as readers move to e-readers or other forms of entertainment.
The association, which represents book and journal publishers in the UK, said global exports had remained crucial to the industry in 2018.
Total publishing exports stayed level at £3.5 billion, accounting for 59% of total sales income.
The association changed its methodology this year and so its results are not directly comparable to those from last year’s report.
The association’s chief executive Stephen Lotinga said: “UK publishing continues to satisfy the insatiable consumer appetite for books in all forms. Investment in digital is paying off, driving growth and meeting reader demand to access books at any time in the format of their choice.
“Audiobooks have grown phenomenally as ever-increasing numbers of people opt to enjoy books in a way that suits new technologies and keeps pace with our busy lives.
“As the industry’s growth is being driven by digital, it is also clear how unfair it is that readers who prefer digital are being taxed 20% more than their print equivalents. The Government must act now to axe the unfair reading tax.
“Despite good top-line revenues, there are some areas of real concern. School textbooks sales have taken a hit as the continuing squeeze on school budgets mean that teachers simply can’t afford the learning resources children need.”