BAT's cigarette sales increased 10% in 2001
Martin Broughton, executive chairman of British American Tobacco (BAT), the second biggest cigarette maker in the world, said he had made a personal decision not to smoke.
The admission comes days after BAT reported a 36% rise in pre-tax profits to more than £2bn ($2.86bn) for 2001.
The tobacco company's four leading cigarette brands - Lucky Strike, Kent, Dunhill and Pall Mall - also achieved sales growth of 10% during the year.
The paper called Mr Broughton's comments "an unprecedented admission that smoking is bad for you" and "the clearest warning yet wrung from a tobacco chief".
Where there's smoke ...
In the interview, Mr Broughton said his son and daughter did not smoke and he would have warned against it if he "caught them behind the bike sheds" when they were younger.
"I said to them 'I would advise you not to smoke. But if you want to smoke it is your affair. It is not good for you. You are better off not smoking,' " he said.
Mr Broughton said he enjoyed only the "occasional after dinner cigar".
BAT is one of several tobacco companies named in class action lawsuits in the US. Billions of dollars could be at stake for the companies.
Smokers claim the firms should have warned of the health risks involved in smoking.
Tobacco companies have championed smoking as a matter of personal choice while their products carry government advice that tobacco can cause diseases that kill.