Writing in the European Respiratory Journal, they found that trained dogs could detect a tumour in 71% of patients.
However, scientists do not know which chemical the dogs are detecting, which is what they say they need to know to develop a screening programme.
Cancer Research UK said that was still a “long way” off.
It was first suggested that dogs could “sniff out” cancer in 1989 and further studies have shown that dogs can detect some cancers such as those of the skin, bladder, bowel and breast.
It is thought that tumours produce “volatile chemicals” which a dog can detect.
Researchers trained four dogs – two German shepherds, an Australian shepherd and a Labrador – to detect lung cancer.
Three groups of patients were tested: 110 healthy people, 60 with lung cancer and 50 with chronic obstructive pulmonary disease, a narrowing of the airways of the lungs.
They all breathed into a fleece filled tube, which absorbed any smells.
The dogs sniffed the tubes and sat down in front of those in which they detected lung cancer smells.
They were successful 71% of the time. The researchers showed the dogs were not getting confused by chemicals associated with chronic obstructive pulmonary disease or smoking.
Dr Thorsten Walles, the report’s author from Schillerhoehe Hospital, said: “In the breath of patients with lung cancer, there are likely to be different chemicals to normal breath samples and the dogs’ keen sense of smell can detect this difference at an early stage of the disease.
“Our results confirm the presence of a stable marker for lung cancer. This is a big step forward.”
Dogs are unlikely to become regular fixtures in doctors surgeries so researchers are working on “electronic noses” which would be able to detect the same chemical as the dog. This chemical or combination of smells has not yet been found.
As the researchers lament: “Unfortunately, dogs cannot communicate the biochemistry of the scent of cancer.”
Dr Laura McCallum, science information officer at Cancer Research UK, said: “Although there are now some intriguing studies suggesting that dogs may be able to smell cancer in some situations, we’re still a long way from understanding exactly which ‘smelly molecules’ they are detecting and if these studies are accurate.
“Because it would be extremely difficult to use dogs in the clinic, further research is being carried out to learn more about these molecules that are released from tumours and whether devices such as ‘electronic noses’ could help sniff them out.”