Psychedelic therapy involving magic mushrooms or MDMA to treat mental illnesses could be five years away from regulator approval in Australia and the Victorian government is being urged to make the state a research leader in the field.

The US Food and Drug Administration recently designated the treatment as “breakthrough therapies” following successful medical trials. International trials are finding synthetic magic mushroom therapy is effective in treating depression, anxiety and addiction while MDMA (methyl​enedioxy​methamphetamine) therapy is helping post-traumatic stress disorder sufferers. The treatment could receive US regulatory approval as early as 2021. The UK, Canada, Europe and Israel are also active research hubs.

In a submission to Victoria’s mental health royal commission, Mind Medicine Australia – which lobbies for psychedelic-assisted treatments for mental health – urges the state government to chip in funding to establish a centre for excellence in psychedelic medicine. It would conduct research and develop best practice and training for therapists.

Mind Medicine Australia executive officer Dr Paul Liknaitzky said the stigma around the therapy has been lifting globally in the past 15 years and there was an opportunity to play catch up.

“Australia has been pretty slow in the uptake,” he told Guardian Australia.

In an Australian-first, St Vincent’s hospital in Melbourne announced in January a psychedelic medicine trial will start this year. It is recruiting 30 palliative care patients to be treated with synthetic magic mushrooms aimed to ease the paralysing anxiety often associated with having a terminal illness. The trial is expected to start in six to eight weeks.

“We urgently need to explore new treatment paradigms and the promise of psychedelic medicines in terms of alleviation of suffering cannot be under-estimated,” St Vincent psychiatrist David Castle said.

Liknaitzky emphasised the treatment was more than just about pills and going on a trip – there was also an important element of talk therapy involved.

“The particular way participants are prepared and supported matters a lot,” he said.

Liknaitzky noted overseas follow-up studies had found 80% of participants using magic mushroom therapy to treat smoking addiction had successfully quit and the use of MDMA therapy for PTSD had a 70% success rate.

PTSD will affect one in 13 Australians in their lifetimes.

Liknaitzky said psychedelic therapy had the potential to save the health system a lot of money in the long term compared to conventional treatments. He said between one to three sessions can be effective.

He estimated the therapy could be approved in Australia in about five years.

There was a flurry of research into psychedelic therapy treatments in the 1950s and 1960s but then US president Richard Nixon launched a crackdown in 1971, classifying all psychedelics as prohibited substances. This was in the context of concern over growing recreational use of hallucinogenic drugs and the youth anti-Vietnam war protest movement.

“We owe it to every person suffering with mental illness and their families to not be held hostage by historical prejudices and to identify the best solutions available to alleviate the increasing suffering in our community,” Liknaitzky said.

American retired US army sergeant Jonathan Lubecky, who suffered crippling PTSD, has penned a letter about his experience with psychedelic therapy to the Victorian royal commission.

Lubecky was deployed to the Iraq war in 2005 and was on a military base that was mortared thousands of times. Within 60 days of returning to the US, he made five suicide attempts.

“The effect this treatment has had on my life has been nothing short of a miracle,” he wrote. “My suicidal ideation slowed and then stopped. My depression also improved greatly over time. I now lead a full and rich life.”

The Royal Australian and New Zealand College of Psychiatrists president, John Allan, is cautious about psychedelic therapy.

“They are quite potent drugs and they have a history of causing quite a lot of trouble when they have been used recreationally in the past,” Allan told the Guardian. “There’s a very low evidence base. It’s still experimental and the exact treatment protocols have not been decided. It’s very, very, very early days.”

Allan said the royal commission should not recommend that public funding be spent on psychedelic therapy research because there were more important spending priorities in mental health. “This is a luxury item,” he said.

* In Australia, crisis support services can be reached 24 hours a day: Lifeline 13 11 14; Suicide Call Back Service 1300 659 467; Kids Helpline 1800 55 1800; MensLine Australia 1300 78 99 78; Beyond Blue 1300 22 4636. In the UK and Ireland, Samaritans can be contacted on 116 123 or email jo@samaritans.org or jo@samaritans.ie. In the US, the National Suicide Prevention Lifeline is 1-800-273-8255. Other international suicide helplines can be found at befrienders.org