Motion also offers show of support for Advisory Council on the Misuse of Drugs, following high profile resignations from body

The Liberal Democrats have voted to establish a panel to consider decriminalising the use of all drugs.

The panel would also consider a less radical alternative: that possession would remain illegal, but those caught would have to appear before a panel and made to undertake "appropriate education, health or social interventions", replacing the existing fines and jail sentences on the statute book.

Any money made available by these reforms would be used for education, treatment and rehabilitation.

The motion also offers a show of support for the Advisory Council on the Misuse of Drugs, following high profile resignations from the body over disagreements with the then-Labour government, and the coalition's plan to remove the statutory minimum of scientists sitting on the council.

The Lib Dem motion says the council should "retain a majority of independent scientific and social scientific experts in its membership" and that no changes to drug laws should be made without its advice.

The panel would carry out an impact assessment of the Misuse of Drugs Act 1971 to evaluate, "economically and scientifically", the legal framework prohibiting drugs.

Ewan Hoyle, a delegate from Glasgow South and the founder of Liberal Democrats for Drug Policy Reform, moved the motion. Drug policy had been a no-go area for politicians because of "cowardice, pure cowardice", he said – fear of the reaction from tabloid newspapers. "It's time politicians looked voters in the eye and attempted to explain complex concepts."

Hoyle added: "I want Nick Clegg to walk into David Cameron's office and say: 'This is part of what is needed to get the country out of a hole.'"

All motions passed at the Lib Dem conference become party policy – but not coalition policy. Asked if the successful motion meant the drugs panel would now be set up, a party spokesman said: "This gives our MPs and ministers backing from conference to take this into government, to put into the coalition process. It will bind ministers and MPs in the coming years as they move forward, if drugs policy comes up, to act on it where appropriate."

He characterised the motion as "not that different from government policy: to follow the science on drugs". But Lib Dem frontbenchers stayed away from the debate, although MEPs Chris Davies and Graham Watson did speak in favour of the motion. Davies told the conference: "Far from reducing the supply of drugs, prohibition has actively encouraged their use. It's a policy that has failed."

Caroline Chatwin, an expert in drugs policy at the University of Kent, said the Lib Dems' motion represented "an important and positive step forward in the recognition that the harm caused by drug policy can be greater than the harm caused by drugs themselves".

"Every year, many people, particularly young people, are criminalised for the possession of drugs when, apart from their drug use, they are otherwise law abiding citizens," she said. "This is a state of play that causes harm to both individuals who are criminalised and society in general, which suffers the consequences of large numbers of disaffected and marginalised members.

"It is particularly damaging that particular groups, such as disadvantaged black males, are disproportionately stopped by the police on suspicion of minor drug offences, breeding disaffection and alienation amongst whole communities."

She added that although the motion was based on Portugal's seemingly successful policy of drug decriminalisation, "David Cameron has already sent drug policy advisers to Portugal to investigate the possibility of adopting a Portuguese strategy here – an idea that he ultimately rejected."

But she said that the Lib Dem motion still "falls short of the mark, by leaving the illegal drug trade in the hands of unscrupulous criminals".

The UK Drugs Policy Commission has also backed the thrust of the Lib Dem motion. Roger Howard, the commission's chief executive, said there was an understandable worry that removing criminal penalties for simple possession could lead to a rise in drug use, but he insisted the move could do some good. "The evidence from other countries suggests there would be no great surge in drug use," he said.

Speaking against the motion in a debate which was at times quite emotional, Julian Cooper, a councillor in Witney, David Cameron's constituency in Oxfordshire, said the proposal "totally underplays the consequences" of legalising drugs, particularly the health consequences.

The motion was passed with only one or two votes against, according to Andrew Wiseman, the chair of the Lib Dems' federal policy committee.