The two biggest cancer charities in Britain, the Imperial Cancer Research Fund and the Cancer Research Campaign, are considering a merger which would make them by far the largest fund-raising body in the United Kingdom.

The organisations, already the third and fourth highest fund-raisers in the country after Oxfam and the National Trust, would become a colossus in the charity world and potentially a more powerful driving force in cancer research even than the government.

The merger would throw into question the future of some of the hundreds of tiny cancer charities often set up in memory of relatives who died of the disease.

The ICRF has a turnover of £115m a year, and the CRC of £107m, making a potential joint turnover of £222m. Between them they will be spending about £175m on research this year. The government has always lagged behind in its spending on cancer research but has now promised to match the voluntary sector within a few years.

Yesterday, Sir Paul Nurse and Gordon McVie, director generals respectively of the ICRF and the CRC, made a joint announcement that they were in discussions. Although the talks are at an early stage, the organisations are in no doubt that closer collaboration, if not full merger, will happen. Trustees will meet in the new year to discuss detail.

Behind the move is a sense that progress is being made towards better diagnosis, treatment and even cures for cancer thanks to the human genome project which should enable researchers to identify the genetic changes that can lead to the development of cancerous cells.

"There is a public excitement now that something is going to happen," said Prof McVie. "People have got wind of the excitement of the human genome project. We are looking for real human benefit down the line. But the cancer research we are talking about now is big money stuff."

"We have established what we call a post-genomic biology unit," said Sir Paul. The project is a joint venture, based in the Sanger Centre in Cambridge - the institution which was responsible for mapping the genome in the UK. "We have put aside £1m a year for five years in the first instance."

It is the sort of research small charities could not dream of funding. The two charities operate in different ways. The CRC funds scientists in academic departments and other institutions to carry out research, while the ICRF has its own research centres and staff. They are responsible for the pay packets of almost 1,400 researchers each.

That dual arrangement would probably continue, said Sir Paul, as it did at the National Cancer Institute in Bethesda in the US. The new organisation, which could possibly scoop the cancer fund-raising pool with the all-embracing name of Cancer Research, would still have nothing like the funds of the NCI, which is given $5bn of state funds, but could play a similarly directive role in making key decisions about the sort of research to be backed.

There are 620 cancer charities in the UK. Prof McVie is quite clear that it is not helpful to have so many. He has succeeded in persuading two to amalgamate with the CRC. "I have approached another 10 and am still talking to two or three and have been totally rebuffed by two or three others.

"You can't stop people setting up a charity, even if what you are doing is already covered by 55 other breast cancer charities. The Charity Commission say it is a real headache.

"There is evidence of double funding and stuff we turn down being funded by other charities."

Sir Paul and Prof McVie said yesterday that there was no reason why a merger should result in closures of their charity shops.