The National Institute for Health and Care Excellence (NICE) now agrees that abiraterone is affordable.
It had previously said the treatment was not cost-effective for the NHS until cancers were more advanced.
The drug costs Â£3,000 a month, but a lower price has been agreed with the manufacturer Janssen.
Janssen also submitted fresh data about the drug's effectiveness to NICE.
Abiraterone, also known as Zytiga, is a hormone therapy, and unlike chemotherapy which kills the cancerous cells, it stops more testosterone from reaching the prostate gland to stifle the tumour.
It is already used at the end-of-life after chemotherapy as it can give patients an extra few months.
But NICE had previously said it could not justify giving the drug to patients with earlier stage disease, even though such patients in Scotland did have access to it.
Instead, patients in England had to rely on their doctors applying to the Cancer Drugs Fund, a special pot set aside for cancer drugs not routinely available on the NHS.
Now NICE says the new evidence submitted by Janssen means it can offer the drug to more patients - those with spreading prostate cancer who have only mild symptoms and who have not responded to androgen deprivation therapy and have not yet been offered chemotherapy.
It is estimated that 5,900 people with this category of prostate cancer might be eligible each year in England.
Prof Carole Longson, from NICE, said: "There are few treatments available for patients at this stage of prostate cancer so this is very good news."
Heather Blake, from Prostate Cancer UK, said: "This long awaited decision is fantastic news and brings an end to years of uncertainty for men and their loved ones. After 18 months our calls have finally been heard as NICE and the manufacturer have managed to negotiate a way forward. However it cannot continue to take so ludicrously long to get men what they need.
"If the newly reformed drug appraisal process really is to work better for men, manufacturers must present best value for money first time around while greater flexibility from NICE must come as standard. We need to see much more focus on what patients need and deserve, otherwise men will men will lose out as they continue to be caught in the middle."
The NHS in Wales is expected to adopt the English guidance.
The new price for the drug on the NHS in England is Â£2,300 for 120 tablets, which is 30 days' supply.
Under the agreed discount, the NHS pays for the first 10 months of treatment with abiraterone. For people who remain on treatment for more than 10 months, Janssen will rebate the drug cost of abiraterone from the 11th month until the end of treatment.

The 22-year-old batted to within nine overs of the close for 157 as they progressed to 470-8, a lead of 64.
He shared stands of 121 with George Bailey (62) and 172 with James Franklin, the latter a Middlesex sixth-wicket record against Yorkshire.
Franklin fell for 99 just before stumps as paceman Jack Brooks claimed 5-89.
England batsman Nick Compton's recent decision to take a break from cricket led to Eskinazi's elevation to the Middlesex first team and he responded with 106 against Lancashire last week.
His latest innings was even better as he advanced his score steadily from his overnight 19 not out and went to three figures off 224 deliveries with a boundary off Steven Patterson, having had a let-off on 84 when Kane Williamson floored a slip chance.
By then he had lost Bailey, who was dropped on 36, and Simpson, both to catches by Tim Bresnan, but Franklin settled in well after taking 30 balls to score his first run.
His partnership with Franklin beat the previous sixth-wicket record for Yorkshire of 166 by Norman Featherstone and Larry Gomes, also at Scarborough, in 1975.
Eskinazi was eventually caught at deep mid-wicket off Brooks, having struck 23 fours in all, and Paul Stirling, Ollie Rayner and Franklin followed as Yorkshire hit back late on, but a draw looks by far the most likely result on the final day.
Patients with prostate cancer in England will now have early access to a drug that can delay the need for chemotherapy.
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Stevie Eskinazi hit a second successive Championship hundred as Middlesex fought back strongly on day three against Yorkshire at Scarborough.