LONDON (Reuters) - Electronic cigarettes are around 95 percent less harmful than tobacco and should be promoted as a tool to help smokers quit, a study by an agency of Britain's Department of Health said on Wednesday.

E-cigarettes, tobacco-free devices people use to inhale nicotine-laced vapor, have surged in popularity on both sides of the Atlantic but health organizations have so far been wary of advocating them as a safer alternative to tobacco and governments from California to India have tried to introduce bills to regulate their use more strictly.

"E-cigarettes are not completely risk free but when compared to smoking, evidence shows they carry just a fraction of the harm," said Professor Kevin Fenton from Public Health England, which carried out the study.

Most of the chemicals that cause smoking-related diseases are absent in e-cigarettes and the current best estimate is that e-cigarette use is around 95 percent less harmful to health than smoking, the study said.

Passive inhalation from an e-cigarette was also much less harmful.

The publicly-funded study goes against a 2014 report by the World Health Organization that called for stiff regulation of e-cigarettes and bans on their indoor use and sale to minors.

It also contradicts the finding of another study by researchers from the University of Southern California which said this week that U.S. teens who tried electronic cigarettes might be more than twice as likely to move on to smoking conventional cigarettes as those who have never tried the devices.

The Public Health England study said e-cigarettes, which are already the most popular quitting aids in Britain and the United States, could be a cheap way to reduce smoking in deprived areas where there remains a high proportion of smokers.

It criticized media campaigns that have called e-cigarettes equally or even more harmful than smoking that could serve as a "gateway" to tobacco cigarettes among teenagers.

"There is no evidence that e-cigarettes are undermining England's falling smoking rates," said Professor Ann McNeil who helped author the study.

"Instead the evidence consistently finds that e-cigarettes are another tool for stopping smoking and in my view smokers should try vaping, and vapers should stop smoking entirely," she added.

Almost all of the 2.6 million adults using e-cigarettes in Britain are current or ex-smokers who are using the devices to help them quit and only 2 percent of young people are regular users, the study said.

Tobacco companies such as Philip Morris International and British American Tobacco (BAT) have viewed e-cigarettes as a solution to declining sales in Britain and the United States and have bought makers of the metal devices.

Calling the study an "incredibly important milestone", a BAT spokesman acknowledged the risk posed by chemicals found in cigarette smoke and said increasing sales of e-cigarettes would greatly benefit their customers' health.

(Reporting by Angus Berwick, editing by David Evans)