Thousands of patients with advanced cancer who have been denied key treatments were told yesterday that a "lack of space" in the NHS was responsible for the failure to make up their prescriptions.

An investigation ordered by the Secretary of State for Health, John Reid, into why patients in some areas can get expensive cancer drugs, while others go without, has found that there are no problems with supply, there is good evidence that the drugs work and there is money available to pay for them. But the official survey of the 34 cancer networks covering England found there was "a lack of suitable space to prepare or administer toxic drugs".

The survey uncovered a three- to four-fold variation in the use of 16 cancer drugs among the cancer networks. For some drugs, such as temozolamide (brand name: Temodal) used for brain cancer, the variation was up to 11-fold.

Launching the report yesterday, Lord Warner, the Health minister, said the uneven use of the drugs was "neither fair nor acceptable".

All the drugs had recently been reviewed by the National Institute for Clinical Excellence (Nice), which was set up in 1999 with the specific aim of ending the postcode lottery in prescribing. But hospitals had failed to follow Nice recommendations.

The investigation was ordered last October after several pharmaceutical companies complained that health authorities were not implementing the Nice recommendations. Roche, makers of trastuzumab (Herceptin) for advanced breast cancer, approved by Nice in 2002, claimed that only a third of eligible patients were receiving it.

Yesterday, the Government's survey showed prescribing rates for Herceptin were low in 13 of the 34 cancer networks.

Cancer drugs for chemotherapy have to be made up in the hospital no more than 24 hours before use. Pharmacists have to work in a "clean room" to avoid contamination and have to wear protective clothing.

Julie Doonan, manager of the specialist oncology pharmacy service at Chelsea and Westminster hospital, London, said: "The doses have to be very specific and there are only so many we can prepare in a day. They are made to order because they are so expensive. If we made them up in advance there would be a huge amount of waste."

The lowest use of drugs was by the network serving Birmingham and the Black Country while the highest was the south-west London network focused on the Royal Marsden hospital.

A series of measures to identify low-prescribing patterns earlier and improve compliance with Nice guidelines was announced yesterday.

Mr Reid said: "I am determined to ensure patients across the country have access to drugs which can help them. I will be asking the local NHS to set out their plans for improvement in the specific areas highlighted in the report."