Voluntary efforts to protect the public from passive smoking have failed in Scotland, according to the BMA.
The charter aims to encourage more smoke-free areas
Scottish secretary Dr Bill O'Neill urged ministers to back legislation following a survey into a voluntary charter on smoking in public places.
Almost 40% of businesses - including more than 70% of bars - said they allowed smoking throughout.
However, Deputy Health Minister Tom McCabe welcomed a rise in the number of premises with smoke-free areas.
The voluntary charter was agreed between the Scottish Executive and the leisure industry in May 2000.
It aims to reduce the number of premises without smoking policies and increase the number of no-smoking areas.
The report said the number of businesses which had introduced smoking policies for the public had risen by 26% since 1999.
The survey of 974 pubs, clubs, hotels and other leisure businesses was carried out in January this year.
It found that 39% of those surveyed allowed people to smoke in all areas accessible to the general public, while 43% restricted smoking and 18% were completely smoke-free.
Almost half the businesses without smoking policies blamed a fear that they would lose custom.
Smoking was still allowed throughout 71% of public houses and bars and 78% of social clubs.
Dr O'Neill said: "The results of this survey provide clear evidence that voluntary measures to protect the public from the effects of passive smoking are failing.
"What is perhaps most worrying is that despite repeated government support for this failed approach, less than half of all businesses surveyed knew about the voluntary charter.
"Distressingly more than three quarters of pubs and nearly four in 10 of all Scottish leisure industry sites allow smoking throughout."
He said it was time for "decisive action" in Scotland.
"The BMA calls on the Scottish Executive to dissociate itself publicly from this failed policy and to support legislation for smoke-free public places," he said.
However, Mr McCabe welcomed the progress being made under the voluntary charter.
"I am particularly pleased to note the increase in the number of premises which offer smoke-free areas," he said.
Most pubs allowed smoking throughout
But he admitted to being "disappointed" that only 11% of firms in the food and entertainment sector had complied with all the charter's requirements.
Mr McCabe said the executive was conducting a review of the national tobacco control strategy, which would analyse the impact of second-hand smoke.
It was also intended to produce an action plan on smoking which was designed to meet Scotland's needs.
He said: "One part of the wide ranging action plan is the intention to engage in a widespread public dialogue on the issue of smoking in public places.
"We're ruling nothing out at this stage and an extension of the voluntary approach remains an option.
"We will consult on this, and other possible options, including statutory controls in order to see how we can best achieve to the extension of smoke-free areas in public places," he said.
Lesley Hinds, the chairwoman of NHS Health Scotland, said it was "encouraging" that things were moving in the right direction.
However, she accepted that there was still "a long way to go".
"If progress is not maintained on the voluntary charter then legislation should be considered," she said.