The number of obese diabetics undergoing drastic weight-loss surgery needs to triple in the next few years to tackle the "major problem" facing the NHS, the health advisory body has urged.
In a U-turn on guidance, Nice said gastric bypass and sleeve gastrectomy surgery should no longer be seen by doctors as a "last resort" and has eased its recommended criteria for the surgeries, to allow for early intervention.
A possible two million people in England could be eligible for the £6,000 operation, which Nice said should now be considered for patients with a BMI of 30 and Type 2 diabetes if they have completed a weight-loss programme.
Nice also recommended that patients should be offered an assessment for surgery without completing the weight-loss programme if they had a BMI of 35 and Type 2 diabetes.
Nice argued that the NHS could reap "huge" financial benefits in the long-term as 65% of post-operation patients would no longer need any diabetes medication within two years and will avoid serious and costly conditions such as heart failure, amputations and blindness.
Professor John Wilding, a consultant physician in diabetes at University of Liverpool and Aintree University Hospitals NHS Foundation Trust - who helped develop the guidance - said he would like to see the number of operations on obese diabetics triple from an average of 4,000 a year to 15,000 a year.
"I suspect somewhere higher than we are at the moment, around 15,000 a year is a more realistic target," he said.
"This is part of what has to be a very comprehensive attack on this major problem."
Rachel Batterham, head of obesity and bariatric services at University College London Hospital NHS Trust - who also helped develop the guidance - said: "We now know that the health benefits of bariatric surgery for people with Type 2 diabetes is so great that it really needs to be considered as part of their treatment pathway.
"We also know that the earlier you have the surgery in your diabetes course, then the more likely you are to have remission or a really good improvement.
"Clearly everybody agrees that prevention is better than treatment.
"But we have to distinguish between prevention and treatment - and for the people who have Type 2 diabetes and obesity we have an effective safe treatment that we know saves lives and reduces the complications of Type 2 diabetes - and saves money."
But she complained that the "healthcare service as a whole hasn't embraced this as an effective, safe treatment".
She added that hospitals which already carried out bariatric surgery could "easily" increase the number of operations they carried out, but that a "bottleneck" effect had arisen because of a lack of vital tier three services - which offers surgery assessments and weight-loss management programmes.
But Professor Iain Broom, director of the centre for obesity research and education at Robert Gordon University in Aberdeen, accused Nice of taking a wrong turn with its new guidance which he argued was in contrast to plans put forward by the chief executive of NHS England, Simon Stevens.
"Nice favour surgery, rather than diet, within the NHS, but they have missed swathes of evidence," he said
"Proposing surgery at this level is also completely against the NHS Forward Plan and in total contrast to the statement in that plan by Simon Stevens.
"The Nice guidance could send tens of thousands of Britons towards unnecessary surgery, with its known morbidity and mortality, and costing taxpayers many millions of pounds, when all that is required is a different dietary and lifestyle approach including the use of low carbohydrate diets and low, and very low, calorie diets.
"Thankfully, they acknowledge the role of these diets under certain circumstances, but they have ignored studies which demonstrate similar weight-losses, and identical health benefits, to surgery, sustainable over many years.
"While surgery has its place, it must remain a last resort."
Last week, the National Bariatric Surgery Registry (NBSR) said 108 men and 462 women aged 24 or under had obesity operations between 2011 and 2013, including 62 people under the age of 18.
Currently, one in 20 people in the UK with Type 2 diabetes occupies one in six beds in some hospitals because of complications caused by the disease, Nice said.