The new pill, called Protelosa, contains the chemical strontium ranelate, which is thought to encourage the body to produce cartilage.
Protelosa was tested on 1,683 people with osteoarthritis of the knee over a period of three years.
Scientists at both Oxford and Southampton Universities found that those taking Protelosa suffered an average of a third less damage to the cartilage than those taking a placebo pill. Therefore if they were taking Protelosa for three years the progression of the disease would be slowed by one year.
Protelosa is already used to treat osteoporosis, but the pill is expected to be licensed by the drugs watchdog, the Medicines and Healthcare products Regulatory Agency, for use on arthritis patients within a year. After that NICE will consider whether it should be available on the NHS.
As the new pill is so cheap and has been found to be so effective, researchers are confident it will be made available on the NHS soon.