The UK Tobacco Advertising and Promotion bill was in the Queen's speech in 2000, but was not in yesterday's Queen's speech. Its omission means that any ban will now be delayed for at least 18 months.
Senior Labour MP David Hinchliffe, who is chair of the influential House of Commons select committee on health, and other health groups joined ASH in its condemnation.
The legislation was a key recommendation of the Hinchliffe committee's report into the tobacco industry last year, and was a Labour manifesto commitment in both 1997 and 2001.
Hinchliffe said, "I am shocked and disappointed that, after what ministers have said about the importance of this legislation, it is now being shelved. Six months ago, [health secretary] Alan Milburn told the House of Commons that smoking is the biggest public health problem faced by the country and that it was essential to get this law on the statute books."
A spokesman for the government said, "There are an awful lot of very good bills that won't be in the first session."
A previous attempt to enact a ban ran out of time as Tony Blair called the June election and parliament was dissolved.
The issue is still a sensitive one for the government. In its first term, it became embroiled in accusations that it had given Formula 1 motor racing exemptions from the ban. It was then disclosed that Formula 1 boss Bernie Ecclestone had donated £1m to New Labour, although the donation was later handed back.
John Connolly, public affairs manager at ASH, said, "By their own figures, a ban on tobacco advertising will save 3,000 lives a year in the long run. Ministers say that the bill was dropped because other areas have higher priority, but it's difficult to think of any other legislation that will save so many lives, cost virtually nothing and has already been through the House of Commons."