UK fishing crews have thrown away stocks of cod worth about £1bn since 1963 due to the practice of discarding catches which exceed or fall outside quotas, according to a thinktank report.

Across all EU fleets, stocks of cod worth £2.7bn were discarded in the North Sea, the Channel and Skagerrak, the strait adjoining Norway, Sweden and the north of Denmark between 1963 and 2008, the New Economics Foundation (NEF) study, Money Overboard, calculated.

Using discard data compiled by the International Council for the Exploration of the Sea and focusing just on cod, one of the best-documented stocks, the NEF calculated that just over 2.1m tonnes of the fish was thrown overboard during the period.

The report adds fuel to the bitter debate over the longstanding fisheries practice, particularly prevalent in heavy-regulated EU waters, of throwing overboard a significant proportion of any catch – up to two thirds in some areas – most of which is by this time dead or dying.

The fish are discarded for a variety of reasons: they can be species which are not included in the boat's quota, stocks which exceed a quota, too small, or simply from a species with low commercial value.

In March the EU's fisheries commissioner, Maria Damanaki, began steps to end the practice of discarding, calling for reforms to quota systems to ensure this happened by the start of 2013.

The issue was highlighted in the UK by a high-profile campaign and accompanying TV series by the chef Hugh Fearnley-Whittingstall, something Damanaki cited as a key factor in her decision.

However, fishing lobby groups have objected strongly to the plan, arguing that already precarious livelihoods will be made untenable if crews are obliged to land large quantities of unpopular, low-value species.

A revised EU common fisheries policy (CFP), unveiled early in July, said discarding would be phased out, with fishing boats obliged to land all stocks of commercial fish they catch, although they will still not be able to sell undersized examples. The reforms are intended to provide an incentive for trawlers to invest in more selective fishing gear.

The NEF argues that a full discard ban will be good news for the fishing industry, citing a study published last month by academics at the University of York which found a discard ban by Norway, a non-EU member, during the late 1980s saw reduced profitability for just four years with Norwegian cod fisheries now among the most lucrative in the world.

Rupert Crilly, an environmental economics researcher at NEF, and the author of Money Overboard, said that for all the potential benefits of an EU discard ban it was only part of a wider issue, mainly connected to general overfishing.

"There needs to be a much more fundamental reform of the CFP, rather than just saying discards need to be banned. It's a little bit too simplistic. What we're saying in this report is: this is the value of what we've been throwing away, it's enormous and it needs to stop, but it's not the only things that needs to change," he said.

It was vital for EU quotas to be set by scientists rather than politicians, and for the approach to be based around the effects on the whole ocean ecosystem rather than on a species-by-species basis.

"What we're arguing is that we need quotas set according to scientific limits.

"In the end this would be good news for the economy, the people who own the resource, which is everybody, and the fishing industry itself, which completes depends on stocks being at their best."