Image caption Peers say users caught with a small quantity of any drug should not be penalised

The possession and use of all illegal drugs should be decriminalised, a cross-party group of peers has said.

The least harmful should be regulated and sold in licensed shops, with labels detailing risks, the group concluded.

The All-Party Parliamentary Group on Drug Policy Reform (APPG) said criminal sanctions did not combat drug addiction, and only marginalised users.

A recent call by MPs for a royal commission on drug decriminalisation was rejected by the prime minister.

Mr Cameron's official spokesman said: "The prime minister's very strong, clear view is that the approach we currently have is the right one and is working."

The APPG - comprising two Conservatives, two Labour peers, one Liberal Democrat and four crossbenchers - took evidence from 31 experts and organisations, including the Association of Chief Police Officers and the Advisory Council on the Misuse of Drugs.

While the supply of the most dangerous substances should remain banned, users caught with a small quantity of any drug should not be penalised, it said.

"The Misuse of Drugs Act is counter-productive in attempting to reduce drug addiction and other drug harms to young people," said group chairwoman Baroness Meacher.

The 1971 act was in desperate need of reform, the group said.

'Relatively safe'

"What we're saying is there are drugs a great deal safer than alcohol and tobacco," Baroness Meacher told BBC Radio 4's Today programme.

Media playback is unsupported on your device Media caption Baroness Meacher: Current drugs system is dangerous

Citing "legal highs" available as substitutes for ecstasy, she said: "If those much safer drugs were provided - say, in a chemist, very carefully labelled - at least you'd know what was in it.

"At the moment 60 million ecstasy tablets are sold every year to young people, all through criminal gangs and the illegal dealers.

"What we're saying is if young people are going to buy these things, is it not better that they know exactly what is in them? They will not be contaminated because they will be provided through legal channels. And the young people will in fact be relatively safe."

In support of decriminalising the use of all drugs, the report made reference to the model in Portugal, where there has been a fall in the number of young addicts under a form of decriminalisation.

The group said: "Some young people will always want to experiment and they are at real risk if they can only buy the less harmful drugs from the same dealers who are trying to push the most harmful ones.

"The illegal dealers also have a clear incentive to adulterate their product to increase their profits."

The chief executive of the charity DrugScope, Martin Barnes, said: "Today's report adds yet further weight and support for a review of drug legislation and the Misuse of Drugs Act.

"DrugScope supports the recent call by the Home Affairs Committee for a Royal Commission - which has the potential to secure cross-party support - to look at options for reform, including decriminalisation.

"While there is positive evidence of an overall decline in drug use, the drug market and related harms is changing, not least the emergence of so-called 'legal highs'. The emphasis should be on public health, prevention and education but it is also right to question whether current legal frameworks and approaches to enforcement are effective in addressing drug use and harms."

The panel Baroness Meacher (crossbench)

Baroness Stern (crossbench)

Lord Cobbold (crossbench)

Lord Low (crossbench)

Baroness Hamwee (Lib Dem)

Lord Howarth of Newport (Lab)

Lord Rea (Lab)

Lord Mancroft (Con)

Lord Norton (Con) More about the group

The drugs charity Release welcomed the report by the APPG and said: "The evidence shows that decriminalisation will reduce the harm related to drug use.

"The research we have published as part of our campaign calling for decriminalisation shows that drug use hasn't significantly increased in any of the countries that have already taken this measure."

The group suggested that strict regulatory controls could be introduced with an enhanced role for trading standards services in the UK.

It added that politicians should be taken out of decisions on the classification of drugs, as the issues involved scientific judgements.

David Cameron last month ruled out a royal commission to consider the decriminalisation and legalisation of banned drugs, on the grounds that the government's approach was working.

He was responding to a Home Affairs Committee report that argued there was a case for a fundamental review of all UK drug policy "now, more than ever".

Official figures show that drug use in England and Wales is at its lowest rate under current measurements since 1996.

Three men were arrested at the weekend after six people needed hospital treatment for taking an illegal hallucinogenic drug.

One man remains in a critical condition after the group fell ill when they took the substance 2CB at a house in the Jesmond area of Newcastle.

A Home Office spokesman said: "We thank the APPG for this report and we will consider its recommendations.

"The UK is leading the way in cracking down on New Psychoactive Substances, or 'legal highs'. We published the NPS Action Plan last year and have introduced temporary class drug orders so we can act swiftly to ban emerging legal highs."