Paramedics should treat more patients at the scene to reduce pressures on A&E and hospital beds, a report has said.
The NHS could save £300million a year by 2021 by avoiding unnecessary ambulance use and caring for patients closer to home, according to a review by Lord Carter of Coles.
The Labour peer said "an ambulance is not a taxi to A&E", as he called for the NHS fleet to be updated to ensure medics have access to patient records and the best technology while on the road.
Frontline staff should also be given better information about other health services they can refer patients to.
The report, which examined 10 ambulance trusts in England, suggests improvements in assessing patients over the phone during 999 calls would help ease the strain on ambulance crews.
A further £200million of savings could be made between 2018 and 2021 by improving the infrastructure of ambulance trusts and staff productivity, it said.
Lord Carter, non-executive director at NHS Improvement, said: "Too many patients are being unnecessarily taken to A&E by ambulances, putting further pressure on hospital services that are already on the back foot.
"Not only is this financially costly, but it takes up staff's time and means patients are having to spend time waiting in A&E when they should be recovering at home.
"An ambulance is not a taxi to A&E.
"Modern technology means that patients can often be treated at the scene. But an ageing ambulance fleet means that this is not always possible."
The time an ambulance spends at hospital has increased from 27 minutes on average per patient to 35 minutes over the last decade, according to the report.
Delays during the NHS winter crisis, when ambulances were seen queuing outside A&Es with patients, cost trusts nearly £50million, it said.
The report calls for the NHS to invest in up to 3,300 new ambulances in the next five years to ensure staff can care for patients at the scene.
Digital access to patient records should also be improved, it said, with most staff currently unable to find out valuable medical information to make informed decisions about care.
Lord Carter said: "Paramedics and other staff have worked incredibly hard as demand for ambulances has soared.
"It is now vital that improvements are made in the infrastructure of the wider NHS to help frontline staff work as efficiently as possible."
Miriam Deakin, deputy director of policy and strategy at NHS Providers, said: "We must recognise the role that ambulance services often play as the 'front door' for patients.
"To be able to realise the levels of savings identified, we must address pressures in other parts of the health and care system.
"Reducing unnecessary trips to hospitals in ambulances could save money, but it will require investment in other areas, for example in primary care, mental health and community services or social care."
The ambulance service has the highest sickness absence rate in the NHS, at an average of 20 days per person per year, the report found.
Ms Deakin said the workforce is at "full stretch".
She added: "Sickness levels across ambulance staff are some of the most severe. The significant shortage of paramedics is unsustainable and must be tackled if we are to address these pressures."
Health Minister Steve Barclay said: "Lord Carter's vital recommendations are another step towards ensuring we have a modern ambulance service which helps paramedics offer more patients high-quality care at the scene.
"By reducing variation across ambulance services, every penny of taxpayers' money can be spent as effectively as possible, with savings
reinvested to improve patient care, which is part of our long-term plan for the NHS."