The low-dose steroid treatment dexamethasone is a major breakthrough in the fight against the deadly virus, UK experts say.
The drug is part of the world's biggest trial testing existing treatments to see if they also work for coronavirus.
It cut the risk of death by a third for patients on ventilators. For those on oxygen, it cut deaths by a fifth.
Had the drug had been used to treat patients in the UK from the start of the pandemic, up to 5,000 lives could have been saved, researchers say.
And it could be of huge benefit in poorer countries with high numbers of Covid-19 patients.
About 19 out of 20 patients with coronavirus recover without being admitted to hospital. Of those who are admitted to hospital, most also recover, but some may need oxygen or mechanical ventilation. These are the high-risk patients whom dexamethasone appears to help.
The drug is already used to reduce inflammation in a range of other conditions, and it appears that it helps stop some of the damage that can happen when the body's immune system goes into overdrive as it tries to fight off coronavirus.
The body's over-reaction is called a cytokine storm and it can be deadly.
In the trial, led by a team from Oxford University, around 2,000 hospital patients were given dexamethasone and were compared with more than 4,000 who did not receive the drug.
For patients on ventilators, it cut the risk of death from 40% to 28%. For patients needing oxygen, it cut the risk of death from 25% to 20%.
Chief investigator Prof Peter Horby said: "This is the only drug so far that has been shown to reduce mortality - and it reduces it significantly. It's a major breakthrough."
Lead researcher Prof Martin Landray says the findings suggest that for every eight patients treated on ventilators, you could save one life.
For those patients treated with oxygen, you save one life for approximately every 20-25 treated with the drug.
"There is a clear, clear benefit. The treatment is up to 10 days of dexamethasone and it costs about £5 per patient. So essentially it costs £35 to save a life. This is a drug that is globally available."
Prof Landray said, when appropriate, hospital patients should now be given it without delay, but people should not go out and buy it to take at home.
Dexamethasone does not appear to help people with milder symptoms of coronavirus - those who don't need help with their breathing.
The Recovery Trial has been running since March. It included the malaria drug hydroxychloroquine which has subsequently been ditched amid concerns that it increases fatalities and heart problems.
Another drug called remdesivir, an antiviral treatment that appears to shorten recovery time for people with coronavirus, is already being made available on the NHS.
The first drug proven to cut deaths from Covid-19 is not some new, expensive medicine but an old, cheap-as-chips steroid.
That is something to celebrate because it means patients across the world could benefit immediately. That's why the top-line results of this trial have been rushed out - because the implications are so huge globally.
Dexamethasone has been used since the early 1960s to treat a wide range of conditions, such as rheumatoid arthritis and asthma. Half of all Covid patients who require a ventilator do not survive, so cutting that risk by a third would have a huge impact.
The drug is given intravenously in intensive care, and in tablet form for less seriously ill patients. So far, the only other drug proven to benefit Covid patients is remdesivir, an antiviral treatment which has been used for Ebola.
That has been shown to reduce the duration of coronavirus symptoms from 15 days to 11, but the evidence was not strong enough to show whether it reduced mortality. Unlike dexamethasone, remdesivir is a new drug with limited supplies and a price has yet to be announced.
(BBC news)