Driving across the border from Somerset into Devon you pass a sign by the side of the road. "Warning: You are now entering a radioactive area," it says. How would you feel? Would you continue your journey – or would you turn round and head for home?

magine if similar signs popped up on the outskirts of Banbury and Northampton, in the Yorkshire Dales, and in parts of Wales, Scotland and Northern Ireland. Would you be inclined to buy a house in those places? Would you go on holiday there?

Some of Britain's best-loved beauty spots turn out to have the highest concentrations of what has been termed the country's worst environmental pollutant. It is an invisible, odourless gas that seeps out of the ground and causes an estimated 1,100 deaths from lung cancer every year. It is called radon and last month the number of homes designated at risk was increased five-fold (from 100,000 to between 500,000 and 600,000), rendering millions more people officially vulnerable.

Radon is a naturally occurring radioactive gas produced by the decay of uranium 238, which is present throughout the Earth's crust. It is concentrated in parts of the country rich in granite, such as Dartmoor in Devon, and Cornwall. In the open air, radon causes no problems. We all breathe it in throughout our lives – and for most of us, radon accounts for half of our total annual radiation dosage. But it can seep into buildings through cracks and holes in the foundations, where it can build up to dangerous levels. What makes it dangerous is that, being odourless and colourless, it is easy to ignore. Professor Sir Richard Peto, the renowned cancer epidemiologist, once remarked: "If only it were blue and people could see it they would take it seriously, but unfortunately it isn't."

When radon is inhaled it attaches itself to cells lining the lungs, and is especially harmful to smokers, whose cells are already damaged. Most homes in the UK have fairly low radon levels, with an average of about 20 becquerels. Some, though, have levels of 200 becquerels or more. For the last 20 years, experts at the Health Protection Agency have warned that work should be carried out in such buildings to lower the levels.

For home owners this means creating a "radon sump" by digging below the foundations and installing a fan and pipe to blow the gas to the outside. Grants are available towards the cost of the works, which average around £1,000, but many owners decline to have their homes tested or to do the work.

In some homes the radiation is as high as 1,000 becquerels, and in a handful levels above 10,000 becquerels have been recorded. Yet although the risks are higher in the worst affected homes, about 90 per cent of deaths from radon occur in homes below 200 becquerels because there are many more of them. Last month, the HPA announced a new target of 100 becquerels, half the existing limit, in recognition that "there is no safe level" of radiation.

Neil McColl, of the HPA's Centre for Radiation, Chemicals and Environmental Hazards, says: "The scientific evidence has shown that the lung cancer risk is proportional to the long-term exposure to radon. There is no safe or unsafe level. We want to keep our focus on homes above 200 becquerels but we also want to make sure that people who are reducing the level should not think that below 200 they are safe. The risk is smaller but it is not zero – particularly if they are smokers or ex-smokers."

Current UK policy is to identify areas where radon levels are high, seal the foundations of new homes with gas-resistant membranes, which cost about £100, and advise existing homeowners how to reduce their exposure by building a radon sump. The policy was criticised by scientists from the University of Oxford last year in the British Medical Journal, who said it was "costly" yet had a "minimal impact on radon-related deaths" as these were linked mainly to homes below the 200 becquerel limit.

The HPA has responded by extending the number of homes falling within its remit. Instead of focusing on areas of high radiation, the agency has proposed a more radical, nationwide policy to install sealed membranes in all new homes, regardless of where they are built. At a cost of about £100 per house, this measure would save about 1,000 lives over the first 20 years, the agency said.

Previous warnings about the risks have been based on evidence from miners who were exposed to high levels of radon while working underground, but there was less certainty about the effect of lower levels present in people's homes. One radiation expert said: "It is a small risk but it is definitely there. When you see young children getting a higher dose than workers at Sellafield [the nuclear reprocessing plant] it is clear something should be done."

The largest and most rigorous study of radon, published in 2004, showed that the gas causes 20,000 deaths from lung cancer in the European Union each year. The research combined the results from 13 studies and showed that smokers were at greatest risk. Worldwide, radon causes a million deaths every decade.

However, it is important to keep these risks in proportion. True, radon kills more people than cervical cancer, for which there is a national screening programme, and more than melanoma, the lethal skin cancer caused by sunburn, about which there are widespread warnings. So, if you live in an area with high levels it is not wise to bury your head in the sand.