The former head of MI5 believes the "war on drugs" has proved fruitless and it is time to consider decriminalising the possession and use of small quantities of cannabis.

Eliza Manningham-Buller has backed calls for the government to set up a commission to examine how to tackle the UK's drug culture and consider the highly controversial move of relaxing the law.

She was speaking at a meeting held by the All Party Parliamentary Group on Drug Policy Reform on Thursday where senior government representatives met experts from across the world to consider ways of combating the issue.

The cross-bench peer said the current policy was failing and it was time to look at alternative ways of tackling the production and use of drugs by assessing how other countries are dealing with the problem. She believes serious consideration needs to be given to the idea of regulating cannabis so that its psychotic effects can be controlled more closely.

"For the next 50, years do we continue on the same well-worn policy track which has proved so successful so far?," she said. "Or will we acknowledge the truth, that we are unlikely to address the harm that is being caused to the world unless we accept, as the US Senate recently did, that much [not all] of the vast expenditure on the so called 'war on drugs' has been fruitless?

"Would harm be reduced if cannabis was regulated so that its more dangerous components, which can lead to psychosis, were eliminated? Should we follow Portugal's example and focus on drug use as a health issue rather than a crime issue?"

Manningham-Buller said there was too much of a knee-jerk opposition to changing drug policy but it is an issue that needs to be at the forefront of national debate.

She urged politicians to come up with a more successful way of tackling the issue by assessing evidence that looks at how to reduce the harmful effects of drugs in a cost-effective approach.

Christian Guy, policy director of the Centre for Social Justice, agreed that the war on drugs was failing but said it would be dangerous to "wave a white flag in surrender".

He added: "Giving up the fight to tackle illicit drug use now would be disastrous; it would further fuel the social breakdown and addiction poverty which destroys so many lives.

"It would send the wrong signal to those who are counting on our help."