The announcement came on the same day that the government admitted that the NHS has failed to meet its target of reducing to two weeks the average wait for prostate cancer patients to see a consultant
The research will test the effectiveness of the latest surgery and radiotherapy techniques in combating the disease.
It will also help to determine whether a screening programme should be introduced for prostate cancer.
The work will be based in the Universities of Bristol, Sheffield and Newcastle, and will involve treatment in nine centres around the country.
Prostate cancer is now diagnosed more frequently following the introduction of the PSA blood test.
Only a minority of prostate cancers spread beyond the gland to cause disease and shorten life.
However, current treatments for prostate cancer have major side-effects such as impotence and incontinence.
They are also not very effective, and do not succeed in cutting death rates from the disease.
It is therefore important that scientists can test the risks and benefits of alternative treatments.
Invited for tests
Through their GP practices, 230,000 men between 50-69 will be invited to attend for a prostate check, including a PSA blood test.
Detailed information and counselling will be provided at each stage.
About one in 10 will have a raised PSA level and will be offered more detailed diagnostic tests.
The pilot study indicates that about 2,000 men will be found to have prostate cancer localised to the prostate gland.
If they consent, they will be randomly allocated to treatment by radiotherapy or by surgery or to active monitoring.
Patients in the active monitoring group will be offered surgery or radiotherapy if their tumour appears to be progressing.
The study will measure the effects of the different treatment options on survival, disease progression, physical and psychological health and quality of life.
In addition, it will provide valuable information on the reliability of the PSA test and on the economic consequences of alternative approaches to diagnosis and treatment.
Lords' admission
Lord Hunt, speaking question time in the House of Lords, told peers that waits for prostate cancer patients to see a consultant were "too long".
When pressed by Tory Baroness Sharples to give the average waiting time, Lord Hunt replied: "The rough average time between seeing a GP and then seeing your consultant is around the 13-week figure."
He said: ""We are aware of delays in referral from a GP to consultants, and that is why the two-week wait target has been set.
"This was set for breast cancer for 1999 and for all other cancers by the end of the year 2000. We will monitor the results of that to ensure that, in relation to prostate cancer, those waiting times are radically reduced."
Prostate cancer caused 8,573 deaths in England and Wales in 1998 - 67% were at age 75 years or older.
Registrations of new cases rose from 6,179 in 1971 to 17,210 in 1993.
A large part of this increase is thought to be due to increasing use of the PSA test and routine examination of tissue obtaining during surgery for apparent benign prostatic enlargement.
Prostate cancer is rare in the under 50's, but more 'young middle - aged' men are being diagnosed.
The PSA test measures prostate-specific antigen in blood.