Cycling generates nearly £3bn a year for the UK economy, a report by the London School of Economics has found.
It says a 20% increase in cycling levels by 2015 could save millions of pounds in reduced congestion, pollution levels and NHS costs.
The report says that regular cyclists take 7.4 sick days per year, compared with 8.7 sick days for non-cyclists, saving around £128m through reduced absenteeism, with projected savings of £2bn over the next 10 years.
More than a million people also started cycling last year, bringing the total number of cyclists to 13 million.
The report also says rising fuel costs, improved cycle networks, concern for the environment, and the pull of the Olympics are all possible factors for the increase in popularity for cycling.