The government's cancer tsar has been ordered to investigate why patients are still being denied life-saving drugs on the basis of where they live.

Professor Mike Richards, the National Cancer Director, is expected to report on why people in some health authorities are not prescribed drugs available elsewhere. Four years after the Government pledged to eliminate so-called postcode prescribing, it has admitted the practice is still continuing.

The investigation was announced by John Reid, the Secretary of State for Health, as released a three-year progress report on the NHS Cancer Plan reforms. He said: "Cancer spending has been rising each year. We need to make sure money is getting through to the front line, and that proven drugs and treatments are available everywhere in the country to those who can benefit from them. Where they are not, I will be seeking rapid action to redress the situation." Mr Reid implied the problem lay with doctors and their opinions of certain drugs, rather than with a lack of funds.

The National Institute for Clinical Excellence (Nice) was set up in 1999 with the specific aim of ending "postcode prescribing". As new drugs and therapies are launched, the Government refers them to Nice, which passes them to a committee of experts and lay people for assessment.

The treatments are assessed on their clinical and cost-effectiveness, and Nice makes a recommendation on who should receive them. But the recommendations are not legally enforceable, and the Government has often not given health authorities extra money for new decisions on drugs.

Some NHS trusts say they do not have the money or staff to implement Nice decisions. Cancer charities have repeatedly raised concerns about "postcode prescribing". One example is the breast cancer drug Herceptin, which can prolong the lives of women with an advanced form of the disease.

Nice ruled 18 months ago that Herceptin should be given to all women who fulfil certain criteria. But research last month showed only one third of eligible women were receiving the drug. Prescribing rates varied from 61 per cent of eligible patients in the South-west of England, to 14 per cent in the Midlands. The drug is expensive, at £5,000 for a 12-week course, and prescribing it to all eligible women could cost the NHS £17m a year.

Another case involves a revolutionary treatment for rheumatoid arthritis called anti-TNF alpha therapy. Anti-TNF can prevent sufferers of severe arthritis from becoming crippled, and last March Nice ruled it should be given to 25,000 patients. But this year the Arthritis and Musculoskeletal Alliance found a third of specialists were still unable to prescribe the drugs to everyone who needed them.

Joanne Rule, chief executive of CancerBACUP, welcomed Mr Reid's decision to launch an inquiry. "The Herceptin sent shockwaves through the system. We need clarity about who is responsible for ensuring money and treatments reach cancer patients."

The report on cancer services did find diagnosis, treatment and survival rates are improving. Deaths from cancer among the under-75 group have fallen by 10 per cent since 1995, and Britain has moved from having the third-highest death rate in Europe in 1960 to having the fifth lowest in 2000.

There are 30 per cent more cancer consultants in Britain than in 1997, and spending has increased by 40 per cent.