The classification system that makes drugs such as cannabis and MDMA (ecstasy) illegal has prevented scientists from properly researching their possible therapeutic uses for conditions such as schizophrenia and depression, according to the government's former chief adviser on drugs.

Professor David Nutt said the UK's laws on misuse of drugs needed to be rewritten to more accurately reflect their relative harms and called for a regulated approach to making drugs such as MDMA and cannabis available for medical and research purposes.

"Regulations, which are arbitrary, actually make it virtually impossible to research these drugs," said Nutt. "The effect these laws have had on research is greater than the effects that [George] Bush stopping stem cell research has had because it's been going on since the 1960s."

Almost all the drugs that could help scientists to understand brain phenomena such as consciousness, perception, mood and psychosis are illegal, including ketamine, cannabis, MDMA and psychedelic drugs such as magic mushrooms. Nutt said there had been almost no work in this field because the government made it difficult for scientists to access the drugs.

A Home Office spokesperson told the Guardian: "The Home Office licensing regime enables bona fide institutions to carry out scientific research on controlled substances while ensuring necessary safeguards are in place."

Nutt, who is professor of neuropsychopharmacology at Imperial College London, made his comments at a briefing in London on Wednesday to mark the launch of his book, Drugs Without the Hot Air.

He is used to being a thorn in the side of the authorities when it comes to drugs regulation. In 2009, he was sacked by the then health secretary, Alan Johnson, from his post as chair of the government's Advisory Council on the Misuse of Drugs for publicly stating that alcohol and tobacco were more harmful than LSD, ecstasy and cannabis.

Researchers who want to experiment on illegal drugs, which come under the schedule 1 list of the Misuse of Drugs Regulations 2001, must apply for a licence from the Home Office. This takes a year to approve and costs thousands of pounds. Researchers are also required to have secure storage facilities and are subject to random inspections by police.

"[The rules] completely limit research at the real cutting edge of science," said Nutt. "I wonder how many other opportunities have been lost in the last 40 years with important drugs like MDMA, with its empathetic qualities, drugs like LSD in terms of treating addictions, cannabis for all the possible uses and insights which it might have for things like schizophrenia. All of those opportunities have been wasted because it is virtually impossible, when a drug's illegal, to work with it."

One of the best treatments for people with post-traumatic stress disorder is to get them to relive their trauma and then teach them how to delete or somehow control the memories. "But many people are so traumatised that, once the memories come back, they just dissociate and can't hold it long enough in order to deal with it," said Nutt.

"There's been one study in the US showing that MDMA, by damping down the negative emotions associated with the trauma, allow people to get into the therapy and get better. We're very keen to set up a similar trial in the UK. The paradox will be that, even if we can show it could work, no one could use it in the UK because no doctor would have the licence.

"LSD was trialled as a treatment for alcoholism in the 1960s and Nutt said the "evidence is that it's as good as anything we've got, maybe better. But no one's using it because it's too difficult."

Nutt said that the lack of scientific research was a direct result of the UK's arbitrary classification of drugs. "Drugs are drugs – they differ in terms of their brain effects but, fundamentally, they're all psychotropic agents and it is arbitrary whether we choose to keep alcohol legal or ban cannabis or make tobacco legal and ban ecstasy. Those are not scientific decisions, they're political or moral or religious decisions."

According to Nutt, research into the effects of drugs would lead to a more rational approach. He said the laws around the misuse of drugs needed to be rewritten, after a thorough, independent review of the harms involved.

"I'm not in favour of legalisation, a free open market of all drugs – that does lead to more use," he said. "We need regulated access across the board."

This would mean drugs such as cannabis, MDMA or BZP being made available for treatments through a pharmacy. Patients could be issued with a card and given access to an annual supply, he said. "Then at least you would know what you were getting."

• This article was amended on 20 September 2012. The original referred to PZP where the drug BZP was meant.