A report commissioned by the Campaign for Effective and Rational Treatment estimated that 47,000 patients could benefit from an extra pounds 170m of government spending.
Despite a 5 per cent increase in five-year survival among cancer sufferers who were diagnosed between 1981 and 1989, the UK still lags behind many European countries and the United States.
The breast cancer survival rate is 82 per cent in the US and 64 per cent in Britain. For colon cancer the figures are 60 per cent against 35 per cent.
"We are nowhere near the top of the league where many cancers are concerned. Our survival rates are much lower than most European countries," said David Kerr, the professor of clinical oncology at the University of Birmingham.
"It's disgraceful that many who could benefit from the effective new drugs ... that have been approved in the Nineties are denied access because drug budgets are unrealistically low."
Treatment is dependent on where patients live, Professor Kerr said. "Postcode prescribing is an absurdity. There is a sense in which we need to re-nationalise the NHS to stop it being such a lottery. For far too many of our patients the choice is to pay privately, rely on health insurance, go abroad, or go without."
Dr Robert Glynne-Jones, a consultant clinical oncologist at Mount Vernon Hospital in Middlesex, said that he sees three or four patients a week whose cancer has returned. "There used to be no treatments available that would help them. But now there are and I find myself surreptitiously looking through their notes for their postcode to see if they have any chance of getting the new drugs," he said.
"Some days I'm ashamed to face my patients," Dr Glynne-Jones added. "There's no easy way to tell them, `Yes, there is a new drug that may help you, but sorry, you can't have it at the moment because there isn't any funding'."
The Government promised yesterday to monitor the prices of pharmaceutical drugs after claims that the cost of some products have risen by 60 per cent in recent months.
The Health minister John Denham said that there had been recent shortages in some generic products but assured MPs that his department would assess whether "any other factors are at work".