Britain is to opt out of a European Union regime for regulating legal highs that would result in only the most harmful new psychoactive substances being subject to full criminalisation.

Announcing the decision – which could attract sanctions from Brussels –the Home Office crime prevention minister, Norman Baker, said he "strongly disputes"' the EU claim that 20% of legal highs have "legitimate commercial and industrial uses". The issue could presage a fresh clash between London and Brussels as the proposed EU drugs directive does not include provision for a UK opt-out.

Britain already has a tougher approach than much of the rest of Europe to synthetic psychoactive drugs such as Benzo Fury, NBOMe and Mephedrone. The home secretary can issue a temporary banning order, which makes it illegal to supply but not possess the new substance for 12 months while the Advisory Council on the Misuse of Drugs investigates how harmful it is and whether the ban should be made permanent.

The Liberal Democrat drugs minister said Britain was ahead of most other countries "in combatting the reckless trade in so-called legal highs, which has tragically claimed the lives of far too many young people".

He said the EU's proposals would hinder rather than help because they would slow down action to ban harmful substances when they were identified.

"We have already banned hundreds of these drugs and our forensic early warning system allows us to closely monitor their availability so we can disrupt their supply," said Baker.

"But we are not complacent. I have commissioned an expert-led review into how our current arrangements can be better tailored to help protect public health and tighten further the supply of such substances."

Legal highs are synthetic laboratory-produced drugs that imitate the effect of more traditional illicit drugs including cannabis, ecstasy and LSD.

New legal highs have been appearing at the rate of more than one a week, are often available over the internet and are outpacing attempts by the authorities to regulate their use. More than 280 different substances have been identified by EU drugs experts as the falling use of cannabis and cocaine across Europe has been offset by their relentless rise.

The new EU directive proposed by Viviane Reding, the justice commissioner, is designed to overhaul a 2005 system for regulating the use of illicit drugs under which it can take up to two years to ban a substance.

The European commission proposes a new system of regulation that would allow a substance to be banned within 10 months of being detected. It includes an urgent temporary procedure under which it would be possible to order a particularly harmful substance to be withdrawn immediately for a period of 12 months while a full risk assessment is carried out.

But it will also then allow a more "graduated approach" under which only the most harmful substances that pose severe risks to consumers' health will face full permanent criminalisation. Those that have "legitimate commercial and industrial uses" – estimated to be as many as 20% – may face a less draconian response.