Nearly 70 per cent of museums and galleries acquire new works only or mainly if they are given them, according to the first authoritative study into collecting.
It is also the Art Fund charity, rather than lottery or government money, that is the most important source of finance for purchases, the survey, carried out by the charity itself, has found.
The Art Fund gave £3.7m towards art and antiquities last year, more than the Heritage Lottery Fund's award of £2.3m - down from £18m 10 years ago.
Most museums and galleries said acquisitions were vital for attracting visitors and were the lifeblood of the service, but 96 per cent said that inadequate core funding was a barrier to buying new works.
Announcing the findings, David Barrie, the Art Fund's director, said that without comparatively small but significant increases in funding from government, museums and galleries would "fossilise" and an important part of Britain's cultural and economic life would be lost.
"The overall picture is exactly as we feared. Most museums have given up active collecting," he said. "But if they can't collect any more, they're heading for stagnation. The collections will be like flies in amber. They won't be reflecting changes around them."
He launched a fierce attack on the Government, notably Tessa Jowell, the Culture Secretary, and Gordon Brown, the Chancellor, for either not understanding or not caring. "There has been a consistent lack of political support for collecting, whether at a national or a local level. The emphasis everywhere is on access, social inclusion, education, education, education.
"All of these things are terrifically valuable, but the problem is that so much emphasis is being put on them, and so little is being put on the core functions of museums in terms of developing their collections, that the system is breaking down. The impression we have is that ministers either don't understand that museums and galleries exist for their collections and must continue to collect or, if they do understand, they don't care because the money just isn't there," he added.
For instance, Mr Barrie said, the Art Fund devised a tax break last year to encourage wealthy people to give major works, but it was rejected by the Chancellor. The Heritage Lottery Fund appeared to be following the political agenda in its choices of projects to fund, he added.
But it is not just this Government that is to blame. "The rot set in a long time ago. It was a Tory government that eliminated the separate purchase grants for the nationals which we said at the time would cause terrible problems, and it has."
The Art Fund survey found that only 12 per cent of museums and galleries collected primarily by buying their own works, with most heavily reliant on gifts and bequests. In only 13 per cent of cases did collecting activity match their aspirations. The east Midlands, the east of England and West Midlands were the three poorest regions in the number and value of purchases, with London the richest. Last year, the national museums bought more than three times the number of objects than all other museums put together.
But lack of funds was not the only problem. Shortage of space and inadequate staffing were also cited. One-fifth of respondents said they needed more information on the art market. There were numerous items galleries had wanted but failed to get. The National Museum Wales gave up on one of only four surviving portraits by the Dutch painter Jan Steen because the £8.1m asking price was beyond its means. The Penlee House gallery near Newlyn in Cornwall wanted The Seine Boat by Stanhope Forbes, the most famous member of the Newlyn School, but could not raise the £1.1m price.
In its defence, Carole Souter, director of the Heritage Lottery Fund, said it had invested almost a third of its total commitment - more than £1bn - to transforming museums, galleries and collections since it was set up 12 years ago. But, she added: "We always ask our applicants to make sure their projects benefit as many people as possible, which is surely what lottery players would expect."
A spokesman at the Department for Culture said: "We wholeheartedly support the Art Fund in their campaigning to help save the best of our artistic heritage and look forward to working with them and the museums on the best ways of doing this. But there is more to a coherent cultural policy than simply funding acquisitions."
The masterpieces that were lost
2005 Study after Velasquez by Francis Bacon. This 1950 painting inspired by the Spanish artist's portrait of Pope Innocent X was discovered after Bacon died in 1992. It was sold to an American collector for £9.5 million.
2005 Designs for Blair's Grave by William Blake, were an important set of 19 watercolours. A dealer outbid the Tate's offer of £4.2m to the owner and the collection was eventually exported to America.
1990 The Badminton Cabinet was made for Badminton House, Gloucestershire, in 1726 and was seen as the most important Florentine work of art of its day. The Beaufort family decided to sell to settle inheritance bills and a campaign failed to find the £8.5m. It was resold two years ago for £19m.
2002 Massacre of the Innocents by Rubens. Unlike some works, this had no British connection. But there were still many who lamented that Canada and not the UK secured it at auction. Only attributed to Rubens in 2001, it then sold in London for a record price of £49.5m.Reuse content