WASHINGTON, Jan 10 (Reuters) - The U.S. Congress and President George W. Bush have stymied efforts to tighten regulation of tobacco and discourage smoking and states have not spent nearly enough to battle cigarettes, the American Lung Association said on Thursday.

The group implied that heavy lobbying and spending by tobacco companies was influencing at least some politicians and urged Congress to give the Food and Drug Administration the authority to regulate cigarettes.

"While many states have failed to make meaningful progress at protecting their most vulnerable citizens, the tobacco companies are spending billions of dollars annually marketing their deadly products," the report reads.

"A report issued by Common Cause and the Tobacco-Free Kids Action Fund found that the tobacco industry made almost $3 million in Political Action Committee contributions to federal candidates during the 2005-2006 election cycle, including more than $1.7 million in contributions directly to federal candidates," it adds.

"The Institute on Money in State Politics found that tobacco companies and retailers gave over $96 million to state-level candidates, committees and ballot measure campaigns during the 2005 and 2006 election cycle."

In 1998, states reached a settlement with tobacco companies in which they received $246 billion over 25 years to pay for the costs of smoking-related illnesses.

But anti-smoking campaigners say states have raided these and other tobacco-prevention funds to cover budget deficits, build roads or pay for non-tobacco related projects.

PRESIDENTIAL VETO

"While the American Lung Association applauds the U.S. Congress for increasing the federal cigarette excise tax by $0.61 to $1.00 per pack, unfortunately it was vetoed by the president and will not take effect," the report read.

"The increased tax would have resulted in current smokers quitting and fewer children starting to smoke."

The report praises efforts by some states.

"Twenty-one states, the District of Columbia and Puerto Rico have now approved comprehensive smoke-free air legislation," it reads.

"In 2007, seven states -- Illinois, Maryland, Minnesota, New Mexico, New Hampshire, Oregon and Tennessee -- significantly strengthened their smoke-free air laws. Tennessee is the first traditional tobacco-growing state to pass strong restrictions on smoking in public places and workplaces."

But states are slower to raise tobacco taxes -- which several studies show can deter smokers. And they also do not spend nearly as much as is recommended on programs to prevent smoking and to help smokers kick the habit, the Lung Association complained.

"More than half of states have not passed comprehensive laws prohibiting secondhand smoke in workplaces and other public places," the report reads.

"Until the political will can be found to implement the proven and effective policies graded in this report, over 438,000 people each year will continue to die from tobacco-related diseases."

The Lung Association report accuses tobacco companies of marketing to youths and even to children with new flavored cigarettes and brightly colored packaging.

Nearly 21 percent of Americans smoke -- a total of 45 million people, according to the U.S. Centers for Disease Control and Prevention. (Reporting by Maggie Fox, editing by Todd Eastham)