The government's drug advisers will begin a review of the classification of ecstasy next week, raising the prospect that the drug could be downgraded from class A.

Ecstasy remains the third most popular illicit drug in Britain, with 5% of young adults aged 16 to 24 saying they have used it in the last year.

The decision by the Advisory Council on the Misuse of Drugs (ACMD), chaired by Professor Michael Rawlins, to review the legal status of ecstasy follows a report by the Commons science and technology committee two years ago recommending urgent action.

The case for downgrading it gathered pace after a landmark Police Foundation inquiry chaired by Viscountess Runciman in 2000, which argued for it to be moved to class B. The inquiry found the best estimates of the toxicity of ecstasy suggested it was several thousand times less dangerous than heroin and was probably involved in fewer than 10 deaths a year.

The MPs heard evidence from Professor Colin Blakemore, then chief executive of the Medical Research Council, that ecstasy was "at the bottom of the scale of harm" and "on the basis of present evidence ... should not be a class A drug".

This view was confirmed by Professor David Nutt, the incoming chairman of the ACMD, in evidence to the MPs and in a Lancet paper last year in which he, Blakemore, Dr Leslie King of the Forensic Science Service and William Saulsbury of the Police Foundation argued that alcohol and tobacco were more dangerous than cannabis, LSD and ecstasy.

Nutt said last year that young people already knew ecstasy was relatively safe, so making it a class A drug made a mockery of the entire ABC classification system. "The whole harm reduction message disappears because people say, 'They are lying'," he said. "Let's treat people as adults, tell them the truth and hopefully work with them to minimise its use," he was quoted as saying last March.

The ACMD is to hold a special evidence session next Friday during which it will hear the latest data on the drug's neuropsychological effects and its toxicity. The number of recent ecstasy-related deaths will also be reviewed in the context of other drug fatalities.

The ACMD is not expected to produce a final recommendation until next year but the past record of its leading members suggests it is likely to recommend that it should be downgraded from class A to B.

However, such a move is likely to be blocked by ministers, raising a prospect of a rerun of their decision on cannabis. The home secretary, Jacqui Smith, made clear earlier this summer that the cabinet intends to override an ACMD recommendation on cannabis and move the drug back to class B from class C.

Possession of ecstasy, as a class A drug, carries a maximum seven-year jail term while dealing can result in a life sentence.

Drugs minister Vernon Coaker has made clear the government believes it should remain in class A but said he would consider any ACMD recommendation.

Transform, the drugs legalisation campaign, argues in its submission to the review that it is a distraction from the fundamental flaws in the overall classification system, which it regards as "harmful and counterproductive".