The report estimates that 18,000 sick days a year are lost due to obesity.
Figures to be presented to Parliament in a National Audit Office (NAO) report on Thursday, show most adults in England are overweight, and one in five is obese.
The report 'Tackling Obesity In England', showed obesity caused 30,000 premature deaths in 1998 alone.
The NHS spends at least £500m a year on treating obesity, which could also be costing the economy over £2bn a year.
If the rise continues, it could cost the economy £3.5bn a year by 2010.
Heart disease, diabetes, high blood pressure and osteoarthritis are all conditions linked to obesity.
Launching the report, the head of the NAO Sir John Bourn, said: "Nearly two thirds of men and over half of women in England are now overweight or obese.
"And the problem here is increasing faster than in most other European countries.
"If prevalence continues to rise at the current rate, more than one in four adults will be obese by 2010."
He said such a rise would increase the incidence of diseases like coronary heart disease.
Huge costs to NHS
Obesity is measured using the Body Mass Index (BMI), which is a person's weight in kilogrammes divided by their height in metres squared.
In 1980, 8% of women and 6% of men in England were obese - by 1998, that had almost trebled to 21% of women and 17% of men.
A further 32% of women and 46% of men are overweight, meaning that most people in England (58%) are now either fat or obese.
The report estimates that 18,000 sick days a year are lost due to obesity.
Changes to the way obesity is dealt with, both in the NHS and at government level were identified in the report.
Sir John added "There are no easy solutions to the problem, but progress is possible. There is scope to do more to promote healthier lifestyles and improve NHS services for the increasing number of people whose health is at risk from excess weight."
Lifestyle changes
The combination of a less active lifestyle and changes to eating patterns are blamed by experts for the rise in obesity.
The report says that part of the solution is to prevent people becoming obese in the first place.
And although 83% of health authorities identified obesity as a public health risk, only 28% had taken any action.
Professor Philip James, chair of the International Obesity Taskforce told the BBC: "We're showing probably the fastest deterioration of anywhere in the world.
"There's a huge epidemic, a tidal wave of obesity for practically every country in the world. But in England, we haven't yet got a grip on it"
He said there needed to be a co-ordinated strategy, and called for a high profile minister for public health.
Heart disease
Coronary heart disease causes 270,000 heart attacks each year in the UK.
Of these, the British Heart Foundation (BHF) estimates that 28,000 are directly attributable to obesity.
Dr Vivienne Press, BHF assistant medical director, said: "Combating obesity relies on well balanced, healthy eating and an increase in regular physical activity."
And she said children should be encourage to develop healthy lifestyles so they carry those habits into adulthood.
A Department of Health spokesman said some measures to tackle obesity had already been introduced, and that the report's recommendations would be examined.