The committee called for an urgent review to make it easier for e-cigarettes to be made available on prescription as well as to spark a "wider debate" on vaping in public spaces and greater freedom for the industry to advertise them as a less harmful option for smokers.
The report, produced by the Commons Science and Technology Select Committee, says that cigarettes and e-cigarettes should not be considered as one and the same thing.
Norman Lamb, the STC's chairman, said that current policy and regulations do not "sufficiently reflect" the lesser harm posed by e-cigarettes than their conventional alternatives. If used correctly, e-cigarettes could be a key weapon in the NHS's stop smoking arsenal.
"E-cigarettes are more likely to be a gateway out of smoking for adults than a gateway into smoking for children", Hazel said.
The government has said it will "carefully consider" the evidence and recommendations made by the by the committee.
E-cigarettes are back in the news.
The committee said the restrictions were "extraordinary" given those suffering from mental health issues smoke "significantly more" than the rest of the population and are nearly 2.5 times more likely to take up the habit.
"Those with mental ill health are being badly let down and NHS England appear to have failed to give this any priority".
Public Health England (PHE) have estimated that e-cigarettes are up to 95% less damaging than regular smoking.
Vaping on an e-cigarette is much less harmful than smoking regular cigarettes, according to MPs, who say the rules around using them should be relaxed.
The Department of Health and Social Care estimates e-cigarettes contribute to between 16,000 and 22,000 people successfully quitting smoking each year "who would not otherwise have done so had they used nicotine replacement therapies or willpower alone".
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E-cigarettes are not covered by the smoking legislation which bans the use of cigarettes in all enclosed public and work places.
"E-cigs in teens are a gateway to subsequent smoking lit cigarettes and e-cig vapour contains a large number of toxins which in time will obviously harm users, and bystanders".
There is no evidence e-cigarettes are a gateway into smoking for young people, Public Health England said.
However, others have argued that relaxing the restrictions ignores the possibility of long-term effects caused by e-cigarettes.
'There is no public health rationale for doing so.
The report also called for limits on refill strengths and tank sizes, which may put off heavy smokers looking for a strong nicotine hit, to be reviewed.
MPs want rules around e-cigarettes to be loosened to help smokers quit.
George Butterworth, from Cancer Research UK, said: "The evidence so far shows that e-cigarettes are far less harmful than tobacco".
- NHS England should set a policy of mental health facilities allowing e-cigarette use by patients unless trusts can demonstrate evidence-based reasons for not doing so.
MPs want to review a ban preventing such a move - as it would now be considered as tobacco advertising.
British scientists have discovered that Smoking electronic cigarette kills the vital cells of the immune system in the lungs and increases the risk of inflammation.
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