A cross-party group of British MPs are calling for the legalisation of cannabis and an end to the "embarrassment" of the country's domestic drugs policy.

They are backing a new report by the Adam Smith Institute and Volteface which claims that legalisation could add more than £1 billion per year to the Treasury's coffers.

Not only would tax revenues be up, but the resulting drop in the number of prisoners jailed for drug offences would mean millions in savings for the taxpayer. 

The 1,363 prisoners held on cannabis-related offences in England and Wales currently cost taxpayers £50m a year. 

Former deputy prime minister Nick Clegg and former health minister Norman Lamb are two leading political figures joining other Labour and Tory members in calling for Britain to follow the example set in the United States. Thus far, eight states have legalised the drug.

Four made the decision in this month's elections, with several others now permitting it on medical grounds.

In 2015, Colorado saw close to a billion dollars in marijuana sales, with the state earning roughly $135m in pot taxes. It expects to pass the billion dollar mark this year, with a tax take of between $150m and $170m.

It is thought that a cannabis market in the UK could generate £6.8 billion annually, resulting in between £750 million and £1.05bn in tax earnings and savings.

Clegg said:

"British politicians need to open their eyes to what is happening in the rest of the world.

"Cannabis prohibition is being swept away on a tide of popular opinion and replaced with responsible legal regulation.

"Now is the time for ministers to start writing the rules for this legal market, including age limits and health warnings, so that we can finally take back control from the criminal gangs."