The study by the Institute of Economic Affairs warns the scheme’s cost has been dramatically underestimated and says it "defies economic logic”.
It will bluntly call for it to be cancelled and suggests ministers are pursing the project to "buy votes” in Labour’s northern heartlands.
The verdict of the report is the latest blow to the troubled scheme and comes after the Department for Transport admitted its own official estimate of the cost was wrong.
It upgraded the official price tag from £33 billion to £43 billion, but today’s report say that is still far short of the full cost of linking London to Birmingham by 2026, then building two lines to Leeds and Manchester by 2032.
The 58-page report, the biggest independent piece of research yet into the cost of HS2, will be officially published on Sunday.
It will show in detail areas where the IEA says costs will soar including how:
* Successful campaigns by local residents will prompt route changes and extra tunnelling. Diversions to the route in Mr Osborne’s Cheshire constituency have already been estimated to have added already £600 million to HS2’s bill but the IEA says many more could follow;
* Out-of-town locations of stations on the proposed line will necessitate spending on new rail lines, trams and buses to take passengers to HS2. Twelve such supporting projects are identified in the study, but many more could arise;
* Councils along the route will push for regeneration grants to provide new shops and other amenities around the new stations.
*Local authorities in towns cities bypassed by the new line will "campaign vigorously” for similar funding to compensate them for losing out.
The institute’s study also argues that the £80billion it expects to be spent on HS2 could deliver £320 billion of economic value if it was instead spent on road, rail and other transport projects with a better cost-benefit ratio.
Dr Richard Wellings, the economist who wrote the IEA’s report, said: "It’s time the Government abandoned its plans to proceed with HS2. The evidence is now overwhelming that this will be unbelievably costly to the taxpayer while delivering incredibly poor value for money.
"It’s shameful that at a time of such financial difficulty for many families the government is caving in to lobbying from businesses, local councils and self-interested politicians more concerned with winning votes than governing in the national interest.”
The study will be taken seriously in Whitehall. The right-of-centre IEA is one of the most influential think tanks in the Treasury and among ministers, while it is close to the Fresh Start group of Conservative backbenchers pushing for a more stridently Tory agenda.
The Government’s plan envisages trains travelling between eight out of Britain’s 10 largest cities at speeds of up to 225mph - although that includes the cities of Liverpool, Edinburgh and Glasgow, which will be connected to HS2 through the existing mainline, and Sheffield, whose station will be on its outskirts.
Work on the first leg, between London and Birmingham is due to begin in 2017.
However opposition to the Coalition’s flagship transport policy has gathered momentum, with experts increasingly concerned that HS2’s economic case does not stack up and that it will blight large tracts of the British countryside.
The paper draws parallels between HS2 and previous taxpayer-funded projects overseen by the Department for Transport which were delivered massively over budget.
HS1, the high-speed rail line that connects the Channel Tunnel with London, was initially expected to cost £1billion. The final bill was around £11billion.
The London Underground’s Jubilee Line extension, the biggest rail project before HS1, came in at four times the original estimate in real terms.
Even though the first train is not due to run along the new line until 2026, values of homes close to the route have already fallen by as much as 40 per cent. Estate agents have said that properties up to a mile from the route are being blighted by the proposed line, with some close to the proposed line failing to sell at any price.
Last month two former Labour cabinet ministers previously in favour of HS2 spoke out against the project. Alistair Darling, a former chancellor, and Lord Mandelson, who served as business secretary, raised concerns after the estimated cost was increased.
Boris Johnson, the Conservative London mayor, has also warned that spending on HS2 is likely to be far higher than currently thought.
However, the Government remains wedded to the project. George Osborne, the Chancellor, maintains that HS2 will change the country’s "economic geography”.
The Department for Transport said that HS2 is "absolutely vital” for Britain and would provide a "huge economic boost” for generations to come.
A spokesman said: "Without HS2 the key rail routes connecting London, the Midlands and the North will be overwhelmed. It will provide the capacity needed in a way that will generate hundreds of thousands of jobs and billions of pounds worth of economic benefits.
"The Government is committed to managing the cost within the budget we have set for the project and to securing maximum value for money for the taxpayer, while also ensuring that preparations are properly made for the most significant infrastructure investment the UK has seen in modern times.”
The spokesman added that suggestions that pressure from businesses or a desire to win votes were the true motivation for HS2 were "frankly bizarre”.
Joe Rukin, the campaign manager of the StopHS2 group, described the IEA’s study as the most hard-hitting attack on the project by an independent group so far.
Mr Rukin said: "The crescendo of opposition to this project is just getting louder and louder and the Government is still not listening.
"The Public Accounts Committee, the National Audit Office and now the Institute of Economic Affairs have all raised concerns. These aren’t bodies with an axe to grind - they’re serious people acting in what they see as the best interests of the country.
"We’ve long suspected that the only people pushing for this vanity project are those with vested interests. The Government is insane if it thinks this will win votes in the North – opposition is getting stronger as more people become aware of this white elephant.”