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Philip Morris, after years of disputing the findings of the US Surgeon General and other medical authorities, made the acknowledgement on its Website.

It stated that there is "overwhelming medical and scientific consensus" that smoking causes lung cancer, emphysema, and heart disease.

The company adds the further significant admission that smoking is addictive.

The announcement is part of a $100m advertising campaign by Phillip Morris to try to improve its poor public image.

Cigarettes cause lung cancer, heart disease and emphysema

President Clinton welcomed the move: "This formal acknowledgment comes far too late but still we must all welcome it," he said.

"It certainly makes clear, what I've said for years, that tobacco companies should answer for their actions in court. They should stop marketing their products to children and they should do much more to reduce teen smoking."

Until US states successfully sued the tobacco industry for the cost of treating ailing smokers, cigarette makers refused to clearly link their products to cancer or any other disease.

The Justice Department filed a lawsuit on 22 September against tobacco companies, including Philip Morris, seeking to recover much of the $20bn spent by the federal government every year on smoking-related illnesses.

"Now that they've made this admission ... maybe they'll spend $50m next year on keeping kids from smoking rather than trying to influence Congress," a White House spokesman said.

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The move is seen as part of the trend from manufacturers to put health-related issues behind them after settling a $246bn lawsuit from US states seeking compensation for the costs of treating smokers.

The BBC's Philipa Thomas:"The company is trying to limit it's legal liability"

Several anti-smoking campaigners said that the statements represented a marked policy shift from the company, which manufactures brand names such as Malboro, Benson and Hedges and Chesterfield.

David Kessler, the former head of the Food and Drug Administration, said: "It really sets a new stage for regulation and legislation."

In what is seen as an attempt to head off potential legal action from future smokers, the website contains links to reports from the US Surgeon General, which are uncompromising in their assessment of the consequences of smoking, and information for smokers who want to quit.

However, Steven Parrish, a senior vice president at the firm, while conceding that smoking caused cancer, said that litigants would still have to prove that cigarettes caused the disease as opposed to any other factor.

He said that the concessions on the website were part of a strategy to take a less combative and defensive stance.

Solicitor Martyn Day: "This is a big policy shift"

Martyn Day, a solicitor who represents former smokers in the UK who are trying to sue tobacco companies, said it was a significant development.

"For 50 years the industry has been refusing to accept the relationship between smoking and health problems."

Survival rate low

Philip Morris make Marlboro cigarettes

Tobacco use remains the leading preventable cause of death in the United States, causing more than 400,000 deaths each year.

In the UK, lung cancer is the most common cancer, with more than 40,000 new cases diagnosed every year.

The survival rate is still extremely low when compared with some other cancers.

Smoking also causes hardening of the arteries which can lead to heart attacks.