The report recommended that cannabis and ecstasy be decriminalised for people aged 16 and older, who are willing to be recorded on a national confidential user's register. Users would be able to purchase drugs from an approved supplier, likely a chemist.

The report, prepared by the not-for-profit think tank Australia21, said prohibition had failed, leaving the manufacture and supply of illicit drugs in the hands of ''criminal elements'' and without proper safeguards and quality control.

The Victorian AMA president, Stephen Parnis, said drugs policy should be based on evidence. ''We cannot allow prejudice to drive drugs policy in this country,'' he said. ''It is really important that we keep looking at the evidence on this issue and don't allow ourselves to become closed-minded about the best way to deal with drug problems in our society.''

The report proposes that cannabis could be controlled with taxation, with growers and sellers subject to ''hard-to-get but easy-to-lose licences'' for cultivation, and wholesale and retail supply.

Cannabis packets would be required to be plain and have warning labels similar to cigarette packets, and people buying cannabis would be forced to show age identification.

A former Australian Federal Police commissioner, Mick Palmer, said criminalisation was failing to deter drug users.

''On any objective assessment, policing of the illicit drug market has had only marginal impact on the profitability of the drug trade or the availability of illicit drugs'' he said.

''Whilst controlling and reducing drug-related criminal trafficking and related offences must remain an important part of any strategy, it should be complementary to the primary aim of providing health and social care and support for drug addicts and users. This should not be construed, however, as suggesting that any message that is given is not strongly negative to drug use."

The report called on the government to consider international examples such as Portugal and Switzerland, which have used decriminalisation in combination with law enforcement measures. All the international examples produced positive health benefits to users without increasing the rate of drug use. It also called for a national drug summit to be held next year - a broad group of stakeholders including parliamentarians.

The Greens senator Richard Di Natale, who contributed to the report, said it offered politicians a chance to discuss drugs policy without fear of political repercussions. ''I have lost count of the number of politicians who privately say to me, 'we're on the wrong track' but stay silent publicly,'' he said.