Welfare recipients who test positive for drugs will be placed on income management under draft laws to go to federal parliament next week.

A previous bill stalled in the Senate amid concerns about unfairness, and lapsed at the end of the last parliament.

If passed, a two-year drug testing trial will be rolled out in three locations – Logan in Queensland, Canterbury-Bankstown in New South Wales and Mandurah in Western Australia.

About 5,000 new recipients of Newstart and the youth allowance will be tested for ice, ecstasy, marijuana, cocaine and heroin.

Anyone testing positive will be placed on income management for a period of 24 months or the duration of the trial.

A second drug test will be scheduled within 25 working days of the positive result. After a second positive test, the jobseeker will be referred to a doctor who will assess their circumstances and identify treatment options.

The jobseeker may be required to undergo drug treatment as part of their job plan.

A $10m treatment fund will boost drug treatment services in trial sites.

“People on welfare who take drugs are denying themselves the best opportunity to take advantage of the jobs we are creating,” said the social services minister, Anne Ruston.

“That’s why the Morrison government is trialling reforms the welfare system to ensure that we can identify and encourage people with substance abuse issues to get treatment, rehabilitate and make them job-ready.”

She said taxpayers expected welfare recipients to spend money on feeding and schooling their children and paying bills rather than on drugs: “This measure is not about punishing people, it is about identifying people who need our help.”

Research has shown unemployed people are more than three times more likely to use amphetamines and one and a half times more likely to use cannabis than those with jobs.

But the Australian Council of Social Service and the Greens have both condemned the bill’s reintroduction.

“Trials aren’t needed, the evidence shows this approach won’t work,” said Senator Rachel Siewert, the Greens’ family and community services spokesperson said. “The Greens will call this out for what it is, an ideological approach that once again demonises those accessing our social safety net.”

Acoss director of policy, Jacqueline Phillips, said: “Clearly, the government is trying to deflect from the overwhelming, broad support for an increase to the appallingly low rates of Newstart and youth allowance after 25 years without a real increase.

“This government’s proposal is designed to stigmatise people struggling to get by on the lowest incomes in the country.”

Phillips said half the people on Newstart are aged over 45 and should not have to provide a urine sample just because they have lost their job.

“Not only is this proposal demeaning, there’s no evidence that it would work,” she said.

A number of drug experts and welfare groups warned against the bill when it was introduced under Malcolm Turnbull in 2017.

A Melbourne University drug expert, Assoc Prof John Fitzgerald, described the policy as “unusual, symbolic and unhelpful”, saying it risked pushing disadvantaged Australians into criminal activity to survive.

He told the Guardian: “It’s so unusual, it really seems quite wacky, to tell you the truth. It would be interesting to see whether anyone in Treasury had actually modelled this on the state criminal justice budgets, because that’s where it’s going to end up.”

He said similar measures deployed in 15 US states had not detected many positive results and were costly to deliver.

Former National Social Security Rights Network’s executive officer Matthew Butt echoed Fitzgerald’s concerns that the policy would have unintended consequences for those who were dealing with drug addiction. “Because, inevitably, the purpose of the trial is to impose obligations on people who may be in the throes of serious addiction,” Butt said.

“We’re very concerned that might have unintended consequences for both people’s families and for communities. The burden falls on the people around them.”