I haven't done this, I've been lucky enough to get out of being underpaid by getting poached for much higher figures. That said, agencies have two conflicting incentives. One is to get a person landed for the highest possible salary, since they get a percentage fee, the other is to place someone who is capable of doing the job. I think they mostly ask you for your current salary as a gauge for your current level of experience or capability. Since you're underpaid, that gauge isn't entirely accurate, so I think it's perfectly understandable to want to tell them what you think you are worth. It's not totally honest, but then again the agencies are also not totally honest with you either. I would do it. I don't think this will come back and bite you at any point. Most people never have to negotiate business deals, but they have to negotiate a salary, and many people are bad at that. There's a certain level of bluffing involved, and you should try to do it without having to lie.
If you want to be totally squeaky clean on this in your conscience, then it would really be best not to disclose your salary in the first place. This is sometimes a good strategy too, since people feel compelled not to insult you with too low an offer. Only sometimes.
If you want to be totally squeaky clean on this in your conscience, then it would really be best not to disclose your salary in the first place. This is sometimes a good strategy too, since people feel compelled not to insult you with too low an offer. Only sometimes.