Scientists at Imperial College London induced intense psychedelic trips in 12 people using high doses of the banned substance psilocybin.
A week after the experience all the volunteers were depression-free, and three months later five still had no symptoms of the condition.
Published in the Lancet Psychiatry Journal, the study welcomes the results as “promising, but not completely compelling”.
Its authors are now seeking further funding from the Medical Research Council and other bodies to carry out fuller trials.
They conceded, however, that the use of a placebo control, a crucial component of thorough clinical trials, would be difficult as it would be obvious who was having a hallucinogenic experience and who was not.
The psilocybin is believed to cause relief from depression by targeting receptors in the brain and disrupting the Default Mode Network, which is responsible for sense of self and is overactive in depressed people.
However, the scientists did not rule out that the psychedelic trip could have caused an “awakening”, of the kind achieved by spiritual teaching, which also helped lift the depression.
An estimated 350 million people worldwide are affected by the disease and the annual cost to the economy in England is thought to be around £7.5 billion, according to government figures.
About one in ten patients are resistant to treatment.
Despite the promising results, the researchers urged people not to try magic mushrooms themselves as a cure for depression.
Lead author Dr Robin Carhart-Harris, said: “Psychedelic drugs have potent psychological effects and are only given in our research when appropriate safeguards are in place, such as careful screening and professional therapeutic support.
“I wouldn’t want members of the public thinking they can treat their own depressions by picking their own magic mushrooms.
“That kind of approach could be risky.”
The volunteers in the trial had the psilocybin administered orally in capsules and were then closely monitored.
“It cost £1,500 to dose each person, when in a sane world it might cost £30,” he said.
“It is important that academic research groups try to develop possible new treatments for depression as the pharmaceutical industry is pulling out of this field.
“Our study has shown psilocybin is safe and fast-acting, so may, if administered carefully, have value for these patients.”
Professor Nutt, who was sacked as the Government’s drugs advisor in 2009 for his outspoken views, urged the Home Secretary to re-designate psilocybin from Schedule 1 of the Misuse of Drugs Act to better enable further clinical trials.
Amanda Feiling, from the Beckley Foundation, which also took part in the research, said: “For the first time in many years, people who were at the end of the road with currently available treatments reported decreased anxiety, increased optimism and an ability to enjoy things.
“This is an unparalleled success and could revolutionise the treatment of depression.”