Researchers behind the drug, known as RG7204, claimed that it was found to reduce the size of tumors by 80 per cent in patients who participated in a trial held at the Memorial Sloan-Kettering Cancer Centre in New York.
And the side effects such as rashes and photosensitivity were all classified as mild, the researchers from the Royal Marsden NHS Trust in London said, adding that the drug could be available as early as 2012.
The breakthrough, according to them, was made following the full decoding of human DNA, which pinpointed a genetic flaw in about half of cases of malignant melanoma.
The flaw drives the cancer cells to grow and spread, but RG7204 seeks out and blocks the mutated gene, called BRAF, causing tumors to shrink.
The scientists believe the drug will have a dramatic effect on treatment for those patients whose cancer has the BRAF mutation.
Dr James Larkin, who led the research, said: "This is an incredibly exciting breakthrough. With a growing incidence of melanoma in younger people, the results of this trial are very encouraging."
"The drug shows a dramatic degree of activity in this disease.I hope it will become available to patients as quickly as possible, perhaps later this year or early in 2012," Dr Larkin was quoted as saying by the Daily Mail.
"It`s a very difficult cancer to treat once it`s spread -- not since the 1970s has there been a significant breakthrough in malignant melanoma."
Interim results from a trial of 700 patients at the Marsden and other international centres have not yet been released, but earlier reports suggested patients in late stages of the disease using the drug might enjoy up to seven extra months of life.
Further findings will be presented at a cancer conference later this year. In the meantime, patients on the trial who were given chemotherapy alone will now also be offered treatment with RG7204.
The drug is currently not available unless patients are enrolled in a clinical trial but a "compassionate programme" is being investigated that could allow it to be used on the NHS before licensing.
It`s manufacturers Roche, a Swiss biotech company, has said it will shortly apply for licensing of the drug in the US and Europe.
Professor Richard Marais, part of the team that helped link the gene to skin cancer, said: "These results represent a paradigm shift in melanoma treatment and will change how we approach treatment of this disease."