Rules around e-cigarettes should be relaxed so they can be more widely used and accepted in society, says a report by a committee of MPs.
Vaping is much less harmful than normal cigarettes and e-cigarettes should be made available on prescription to help more people quit smoking, it said.
The report also calls on the government to consider their use in public places.
There is no evidence e-cigarettes are a gateway into smoking for young people, Public Health England said.
The report on e-cigarettes, by the science and technology MPs' committee, said they were too often overlooked by the NHS as a tool to help people stop smoking.
For example, it said it was "unacceptable" that a third of the 50 NHS mental health trusts in England had a ban on e-cigarettes, when there was a "negligible health risk" from second hand e-cigarette vapour.
The report also wants to see:
- greater freedom for industry to advertise e-cigarettes
- relaxing of regulations and tax duties on e-cigarettes to reflect their relative health benefits
- an annual review of the health effects of e-cigarettes, as well as heat-not-burn products
- a debate on vaping in public spaces
- e-cigarettes licensed as medical devices
- a rethink on limits on refill strengths and tank sizes
- an end to the ban on snus – an oral tobacco product which is illegal in the UK under EU rules
Around 2.9 million people in the UK are currently using e-cigarettes.
It is estimated that about 470,000 people are using them as an aid to stop smoking and tens of thousands are successfully quitting smoking each year as a result.
Although the report recognised the long-term health effects of vaping were not yet known, it said e-cigarettes were substantially less harmful than conventional cigarettes because they contained no tar or carbon monoxide.
Norman Lamb, chairman of the science and technology committee, said: "E-cigarettes are less harmful than conventional cigarettes, but current policy and regulations do not sufficiently reflect this and businesses, transport providers and public places should stop viewing conventional and e-cigarettes as one and the same.
"There is no public health rationale for doing so," he said.
"Concerns that e-cigarettes could be a gateway to conventional smoking, including for young non-smokers, have not materialised.
"If used correctly, e-cigarettes could be a key weapon in the NHS's stop-smoking arsenal."
Mr Lamb said medically licensed e-cigarettes "would make it easier for doctors to discuss and recommend them as a stop-smoking tool to aid those quitting smoking".
"The approval systems for prescribing these products must be urgently reviewed," he said.
Public Health England estimates that e-cigarettes are 95% less harmful than normal cigarettes.
Duncan Selbie, chief executive of PHE, said: "E-cigarettes are not without harm but are way safer than the harms of tobacco.
"The UK leads the world in harm reduction from tobacco and there is no evidence that they are acting as a gateway into smoking for young people.
"We want to see a tobacco-free generation within 10 years and this is within sight."
The charity Action on Smoking and Health welcomed the report but said it had some concerns over rule changes on advertising, which could mean tobacco companies being allowed to market their e-cigarettes in packs of cigarettes.
George Butterworth, from Cancer Research UK, said the government should carefully consider the report's recommendations.
But he said any changes to current e-cigarette regulations "should be aimed at helping smokers to quit whilst preventing young people from starting to use e-cigarettes".
'Stub' it out or puff away? The debate on e-cigarettes
The report is the latest in a long-running debate about e-cigarettes and their harm.
It comes days after a small study suggested vaping can damage vital immune system cells.
The small experimental study, led by Prof David Thickett, at the University of Birmingham, found it can damage the lungs although further further research is needed to better understand the long-term health impact.
A survey in Scotland found young people who use e-cigarettes could be more likely to later smoke tobacco.
And in Wales, concern have been raised abut young people using e-cigarettes on a regular basis.
But elsewhere, a six month trial at an Isle of Man jail found allowing inmates to smoke e-cigarettes made them calmer and helped them quit smoking.