A six-year study of Britain's drug laws by leading scientists, police officers, academics and experts has concluded it is time to introduce decriminalisation.

The report by the UK Drug Policy Commission (UKDPC), an independent advisory body, says possession of small amounts of controlled drugs should no longer be a criminal offence and concludes the move will not lead to a significant increase in use.

The experts say the criminal sanctions imposed on the 42,000 people sentenced each year for possession of all drugs – and the 160,000 given cannabis warnings – should be replaced with simple civil penalties such as a fine, attendance at a drug awareness session or a referral to a drug treatment programme.

They also say that imposing minimal or no sanctions on those growing cannabis for personal use could go some way to undermining the burgeoning illicit cannabis factories controlled by organised crime.

But their report rejects any more radical move to legalisation, saying that allowing the legal sale of drugs such as heroin or cocaine could cause more damage than the existing drugs trade.

The commission is chaired by Dame Ruth Runciman with a membership that includes the former head of the British Medical Research Council, Prof Colin Blakemore, and the former chief inspector of constabulary, David Blakey.

The report says their analysis of the evidence shows that existing drugs policies struggle to make an impact and, in some cases, may make the problem worse.

The work of the commission is the first major independent report on drugs policy since the influential Police Foundation report 12 years ago called for an end to the jailing of those possessing cannabis.

The UKDPC's membership also includes Prof John Strang, head of the National Addictions Centre, Prof Alan Maynard, a specialist in health economics, and Lady Ilora Finlay, a past president of the Royal Society of Medicine.

The report says that although levels of illicit drug use in Britain have declined in recent years, they are still much higher than in many other countries. The UK has 2,000 drug-related deaths each year and more than 380,000 problem drug users.

The 173-page report concludes: "Taking drugs does not always cause problems, but this is rarely acknowledged by policymakers. In fact most users do not experience significant problems, and there is some evidence that drug use can have benefits in some circumstances."

The commission's radical critique says the current UK approach is simplistic in seeing all drug use as problematic, fails to recognise that entrenched drug problems are linked to inequality and social exclusion, and that separating drugs from alcohol and tobacco use makes it more difficult to tackle the full range of an individual's substance use.

It says the £3bn a year spent tackling illegal drugs is not based on any evidence of what works, with much of the money wasted on policies that are not cost-effective.

It argues that even large-scale seizures by the police often have little or no sustained impact on the supply of drugs; that Just Say No campaigns in schools sometimes actually lead to more young people using drugs; and that pushing some users to become abstinent too quickly can lead to a greater chance of relapse or overdose and death.

The commission argues a fresh approach based on the available evidence should be tested. Its main proposals include:

• Changing drug laws so that possession of small amounts of drugs for personal use would be a civil rather than criminal offence. This would start with cannabis and, if an evaluation showed no substantial negative impacts, move on to other drugs. The experience of Portugal and the Czech Republic shows that drug use would not increase and resources can be directed to treating addiction and tackling organised crime.

• Reviewing sentencing practice so that those caught growing below a specified low volume of cannabis plants faced no, or only minimal, sanctions. But the production and supply of most drugs should remain illegal.

• Reviewing the level of penalties applied against those involved in production and supply, as there is little evidence to show that the clear upward drift in the length of prison sentences in recent years has proved a deterrent or had any long-term impact on drug supply in Britain.

• Reviewing the 1971 Misuse of Drugs Act so that technical decisions about the classification of individual drugs are no longer taken by the Advisory Council on the Misuse of Drugs (ACMD) or politicians but instead by an independent body with parliamentary oversight.

• Setting up a cross-party forum including the three main political party leaders to forge the political consensus needed to push through such a radical change in approach.

Blakemore said: "Medicine has moved past the age when we treated disease on the basis of hunches and received wisdom. The overwhelming consensus now is that it is unethical, inefficient and dangerous to use untested and unvalidated methods of treatment and prevention. It is time that policy on illicit drug use starts taking evidence seriously as well."

Blakey, who is also a former president of the Association of Chief Police Officers (Acpo), said the current approach of police taking action against people using drugs was expensive and did not appear to bring much benefit. "When other countries have reduced sanctions for low-level drug users, they have found it possible to keep a lid on drug use while helping people with drug problems to get into treatment," the former chief constable said. "But at the same time, we need to continue to bear down on those producing and supplying illicit drugs. This is particularly important for those spreading misery in local communities."

Runciman said government programmes had done much to reduce the damage caused by the drug problem over the past 30 years, with needle exchanges reducing HIV among injecting drug users and treatment programmes which had helped many to rebuild their lives. The commission's chair said: "Those programmes are supported by evidence, but much of the rest of drug policy does not have an adequate evidence base. We spend billions of pounds every year without being sure of what difference much of it makes."

The home secretary, Theresa May, last month ruled out any moves towards decriminalisation, saying it would lead to further problems.

She told MPs she considered cannabis a gateway drug: "People can die as a result of taking drugs, and significant mental health problems can arise as a result of taking drugs."