Senior Liberal Democrats and other Labour and Tory figures backed a report that argues the UK should follow the lead of the US.
Eight states have legalised the drug so far, four in this month's elections, and several others allow its use for medical reasons.
The report, by the Adam Smith Institute and Volteface, claims legalisation could net the Treasury more than £1bn a year in tax revenue.
It also says the number of prisoners in jail for drugs offences would drop, saying the taxpayer millions.
The primary reason, the MPs say, is that the UK's drugs laws have failed.
Former deputy PM Nick Clegg said: "British politicians need to open their eyes to what is happening in the rest of the world.
"Cannabis prohibition is being swept away on a tide of popular opinion and replaced with responsible legal regulation.
"Now is the time for ministers to start writing the rules."
Former Conservative cabinet minister Peter Lilley said: "It is time we legalised cannabis. Currently cannabis can only be obtained from illegal gangs who also push hard drugs. So we are driving soft drugs users into the arms of
hard drugs pushers."
hard drugs pushers."
Labour MP Paul Flynn, meanwhile, added: "The UK's 45 years of harsh prohibition has multiplied use and harm.
"A legal market would destroy the drug's attraction as forbidden fruit and encourage users to ingest cannabis, of known strength and quality, in ways that will the avoid deadly dangers of smoking."
Germany is also getting ready to legalise cannabis for medical purposes and Canada is preparing for all-out decriminalisation.
The Netherlands effectively decriminalised cannabis decades ago while Portugal legalised it in 2001.
The report claims Britain's "dark ages" drugs policy is failing to stop drugs being manufactured and used, and failing to stop it being associated with crime, corruption and killing.
Campaigners said they want "root and branch" reform to legalise and regulate cannabis to ensure it meets acceptable standards.
At that point, they say, it will be taken out of the hands of the gangs.
Cannabis, a class B drug, is illegal in the United Kingdom but Lib Dem MP Norman Lamb put forward a bill that would legalise and regulate its use in March.
Earlier this year, an all-party parliamentary group on drug policy reform said Cannabis should be available on prescription.
But there is a vocal lobby against following the US's lead in the UK, with some doctors saying it has a number of side-effects including damage to mood, memory and motivation.
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