Somatic models of tissue pathology commonly use induction of gene-specific mutations in mice mediated by spatiotemporal regulation of Cre recombinase. Subsequent investigation of the onset and development of disease can be limited by the inability to track changing cellular behaviours over time. Here, a lineage-tracing approach based on ligand-dependent activation of Dre recombinase that can be employed independently of Cre is described. The clonal biology of the intestinal epithelium following Cre-mediated stabilisation of β-catenin reveals that, within tumours, many new clones rapidly become extinct. Surviving clones show accelerated population of tumour glands compared to normal intestinal crypts but in a non-uniform manner, indicating that intra-tumour glands follow heterogeneous dynamics. In tumour-adjacent epithelia, clone sizes are smaller than in the background epithelia, as a whole. This suggests a zone of ∼seven crypt diameters within which clone expansion is inhibited by tumours and that may facilitate their growth.