Rules controlling pharmacies should be scrapped, according to the UK's trading watchdog.

The Office of Fair Trading called for an end to the restrictions on entry to the community pharmacy market in a bid to boost choice and competition.

The central recommendation was that regulations should be lifted to allow any registered pharmacy with qualified staff to dispense NHS prescriptions.

The change would save consumers around £30 million a year and save the NHS £10 million in administration costs.

The watchdog said ending the rules would give consumers greater choice, benefits from greater competition and better access to pharmacy services.

Its investigation into the industry also concluded that there would also be a large cut in regulatory costs for both business and government.

The current rules, says the OFT, have blocked new businesses as well as restricted the location of pharmacies and opening hours.

A report will now go to ministers, including trade and industry secretary Patricia Hewitt, and the government is expected to give its response within 90 days.

Director general of fair trading, John Vickers, said regulations were impeding new sources of supply to the public.

"Pharmacies are a vital part of the UK healthcare system. These regulations restrict competition and choice for consumers, impose a regulatory burden and limit the ability of businesses to respond to evolving customer demands," he said.

"Liberalisation should benefit consumers, businesses and healthcare provision. So we are recommending deregulation to government."