The drug, dexamethasone, reduced death rates by a third for patients on ventilators, and by a fifth for patients needing oxygen.
Scientists in the UK have discovered a cheap and available treatment for COVID-19 patients.
They have described the use of common steroid drug dexamethasone in treating the coronavirus as a “major breakthrough”.
Professor Peter Horby, a University of Oxford academic who led the trial, said “what we saw was really quite remarkable”.
He said the drug reduced death rates by around 35% for COVID-19 patients on ventilators, and by about 20% for patients needing oxygen.
Speaking at the daily Downing Street news briefing, he said: “In three months, we have enrolled over 11,500 patients and this makes it by far the biggest clinical trial in the world.”
Professor Horby said the majority of patients being treated in hospital for COVID-19 were likely to benefit from the study, after conducting a trial comparing 2,000 people being treated with the drug and 4,000 without.
Prime Minister Boris Johnson hailed it as the “biggest breakthrough yet” in treating the virus.
“I am proud of these British scientists, backed by UK government funding, who have led the first, robust clinical trial anywhere in the world to find a coronavirus treatment proven to reduce the risk of death,” he said.
“I’m very grateful to the thousands of patients in this country who volunteered for the trials – thank you.”
The PM said the drug would be made available across the NHS and “we have taken steps to ensure we have enough supplies, even in the event of a second peak”.
England’s chief medical officer Professor Chris Whitty, meanwhile, said it was “the most important trial result for COVID-19 so far”.
The findings have been published from the Recovery trial which is assessing a number of different possible coronavirus treatments.
It is thought the drug could have saved between 4,000 to 5,000 lives if it had been used earlier in the pandemic.
Martin Landray, an Oxford University professor who is co-leading the trial, said: “This is a result that shows that if patients who have COVID-19 and are on ventilators or are on oxygen are given dexamethasone, it will save lives, and it will do so at a remarkably low cost.
“It’s been around for probably 60 years.
“It costs in the order of £5… for a complete course of treatment in the NHS, and substantially less – probably less than one dollar – in other parts of the world, for example in India.”
Speaking earlier, Professor Horby, said dexamethasone – a generic steroid widely used in other diseases to reduce inflammation – is “the only drug that’s so far shown to reduce mortality – and it reduces it significantly”.
“It is a major breakthrough,” he said.
There are currently no approved treatments or vaccines for COVID-19.
More than 11,500 patients from 175 NHS hospitals have been enrolled on the Recovery trial since it was set up in March to test a range of potential coronavirus treatments.
In the dexamethasone study, 2,104 patients received 6mg of dexamethasone once a day by mouth or intravenous injection for 10 days.
Their outcomes were compared with a control group of 4,321 patients.
Over a 28-day period, the mortality rate among patients requiring ventilation was 41%, and for those needing oxygen it was 25%.
Among those not requiring respiratory intervention the figure was 13%.
While the study revealed the steroid reduced deaths in ventilated patients and in people needing oxygen, there was no change in deaths among patients who did not require respiratory support.
More than 41,700 people have died in hospitals, care homes and the wider community after testing positive for coronavirus in the UK, the Department of Health has said.
However the government figures do not include all deaths involving COVID-19 across the UK, which is thought to have passed 52,000.