The new blood test focuses on germ cell cancers that are rare but take root in cells that develop into sperm and eggs and may lead to malignant tumours in childhood.
By identifying four types of genetic code commonly found in malignant tumours, the hope is to get rid of the need for surgical biopsies and make diagnosis, particularly of childhood brain tumours, more accurate.
The test distinguishes between malignant and benign germ cell cancers.
"Although relatively rare, childhood germ cell tumours need to be diagnosed accurately and followed up carefully to give us the best chances of treating them," Professor Nick Coleman told the Cambridge News website.
"At the moment, we are not good enough at diagnosing these tumours and monitoring their treatment: we need better, safer and more cost-effective tests."
"This test could be exactly what we need: it could help us diagnose malignant tumours cheaply, safely and above all, more accurately than current methods," said Dr Matthew Murray from Cambridge University Hospitals NHS Foundation Trust.
"Our next step is to confirm our findings in a large clinical trial and, if this is successful, we hope to see the test in routine use in hospitals."
The research was funded by Sparks charity, Great Ormond Street Hospital Children's Charity and Cancer Research UK, together with a team of university researchers and Addenbrooke doctors.