Smoking in bars and clubs should be banned to avert thousands of deaths from cancer, heart disease and other illnesses, a report on public health is expected to advise today.

The report by Derek Wanless is expected to make the case for outlawing smoking in public places - including at work - to protect people from second-hand smoke and to encourage smokers to quit. The former banker, brought in to advise the Cabinet on Britain's health crisis, will say smoking is "the single greatest cause of preventable illness and premature death."

In 1995, an estimated 120,000 people died because of smoking. The British Medical Association estimates that at least 1,000 people a year die from second-hand smoke.

The report's conclusions could prove embarrassing for the Government, which has been accused of ignoring calls to outlaw smoking in public places. But sources close to John Reid, the Health Secretary, said he would "take seriously" Mr Wanless's proposals and his recommendations would feed into a wider consultation on public health. "We think there should be a balance reached between a nanny state and a Pontius Pilate state," said a source. "The Wanless report will make an important contribution to our consultation."

Downing Street has previously intervened to hold up a ban on smoking at work because of fears from industry that it will create red tape and cost businesses such as pubs and hotels millions of pounds. But there are indications that ministers may now back a change in the law. The Labour Party, in its "Big Conversation" with voters, has proposed giving councils powers to enforce a workplace ban.

In an interim report by Mr Wanless, published in December, he noted that the rate of decline in smoking had "levelled out primarily because of the high uptake of smoking among young adults".

Sir Liam Donaldson, the chief medical officer, supports a ban on smoking in public places because he believes it could lead to one in five of Britain's 13 million smokers quitting.

The anti-smoking campaign group Action on Smoking and Health, called yesterday for a ban to be introduced urgently. A spokesman said: "We hope that the Wanless report will be the final spur on a previously reluctant government to take action."

The report, Securing Good Health for the Whole Population, will also highlight the need to cut obesity, improve diet and increase levels of exercise as part of a 20-year programme to improve the nation's health.