Attorney-General Mark Speakman is pushing for a pilot of a drug diversion program that would give police the discretion to hand people caught with drugs for personal use two $400 penalties, before forcing them into the courts.

Mr Speakman defended the scheme after a report in the Daily Telegraph referred to it as "radical" and suggested it had been defeated in cabinet.

The push comes after the NSW government ruled out five key recommendations from a 2020 inquiry into ice use, including decriminalising drugs found for personal use.

"Illicit drugs can ruin the lives of users and those around them," Mr Speakman told AAP in a statement on Thursday.

"Sadly illicit drug use is widespread in our community; for example, statistics suggest that one in seven Australian men in their 20s have used cocaine in the last 12 months.

"The current approach is clearly not working."

He said the first aim of any drug reform should be to slash illicit drug use, and the second should be to reduce harm.

The pilot would give police the discretion to issue two $400 infringements, with those penalties waived if users undertook health interventions.

"Such a scheme would not be 'soft' on drug use," Mr Speakman said.

The $400 fine was larger than the average one issued for first offenders in court, and the ice inquiry recommended a more generous three notices.

"Such a scheme would be connecting drug users with appropriate health treatment," Mr Speakman said.

Infringement schemes were supported by former police commissioner Mick Fuller in his submission to the ice inquiry, and were also backed by former police commissioner Andrew Scipione.

"This is hardly radical - we already have an infringement notice scheme in place for drugs at music festivals, but without health interventions," Mr Speakman said.

Severe penalties for supplying and trafficking would remain in place.

"I welcome cabinet debate of this and other ways to tackle the scourge of illicit drugs in our communities," Mr Speakman said.

Treatment providers say the scheme is a step forward, but the government must embrace ambitious change of its drug policies.

"It's quite obvious to every family, to every police officer, to every social worker and even for politicians that our drug laws are an abysmal failure," said Matt Noffs, CEO of the Ted Noffs Foundation.

"The AG's proposed drug reforms must aim higher," he said, adding that jailing young people was both a waste of money and their lives.

"Locking kids up transforms them into criminals, and often for life."

Law Society of NSW president Joanne van der Plaat called on the government to listen to the experts and deliver reforms to help drug users.

"The law society agrees ... with law enforcement authorities who have said we can't arrest our way out of drug problems," she said.

Greens MP Cate Faehrmann said the attorney-general's proposal would not reduce harm and would allow police to discriminate against vulnerable people.

"The government has ignored the recommendations of the ice inquiry for over two years now, despite it bringing together the views of the leading drug and alcohol experts," Ms Faehrmann said.

The government has previously ruled out decriminalisation, despite it being recommended by the ice inquiry, over fears of "normalising" drug use.

In December 2020, following the inquiry, cabinet broadly agreed to the attorney-general's proposal to decriminalise small amounts of drugs, before opposition from then police minister David Elliott and conservative National MPs saw it scrapped.

Australian Associated Press