The researchers from London and Edinburgh were able to pinpoint the gene after scanning the DNA of over 30,000 people of whom half had the disease.
As many as 35,000 bowel cancer cases are diagnosed every year in the UK and in the U.S. 135,000 cases will be diagnosed this year alone and 56,000 will die from the disease.
They researchers estimate that half the population have the genetic fault which is linked to 1 in 10 bowel cancers; however that increased risk is too small to warrant a genetic test.
But they suggest that being able to identify the genetic variants will foster a better understanding of how such changes can lead to cancer.
They say as more genes associated with the condition are identified, it may be possible to design a test for a combination of genes to identify those most at risk, thereby improving prevention and diagnosis.
Although several genes are already known to contribute to risk for bowel cancer they are extremely rare among the population and account for less than 5% of bowel cancer cases every year.
But it has been estimated that genetic risk contributes to around a third of cases.
Professor Malcolm Dunlop, from the University of Edinburgh and the Medical Research Council's Human Genetics Unit, compared the DNA of around 8,000 bowel cancer patients from North America, France and Scotland, to that of around 8,000 healthy people.
The team did a "whole genome search" and tracked down the gene which is faulty more often amongst bowel cancer patients than in people without the disease.
Another study carried out by researchers at the Institute of Cancer Research also identified the same faulty gene after analysing the DNA of a similar number of patients and healthy people from England.
Professor Ian Tomlinson who led the study, says the discovery is an important first step but there is a long way to go before a complete picture exists of all the genes that are involved in inherited bowel cancer risk.
Scientists recently found that men who have the same genetic variant are at an increased risk of developing prostate cancer.
Professor Dunlop says it may eventually be possible for scientists to design treatments to prevent people at increased risk of the disease from developing bowel cancer altogether.
Similar genome wide studies are underway for lung and ovarian cancer and scientists hope to find out more about the genes linked to these cancers as a result.
Cancer Research UK who are funding the studies say it is hoped people at increased risk of developing a range of cancers will be helped by such research.
According to Cancer Research UK the lifetime risk of developing bowel cancer is 1 in 20 for the general population, but this increases to 1 in 16 for people who have inherited the genetic variant.
Experts believe that both genes and environment factors such as diet and lifestyle contribute to the risk of bowel cancer.
The research is published in Nature Genetics.