The UK has the largest market for so-called "legal highs" in the European Union, according to the United Nations Office on Drugs and Crime (UNODC).
A total of 670,000 Britons aged 15-24 have experimented with the substances at least once, it says in its 2013 World Drug Report.
It says there has been an alarming increase worldwide in new psychoactive substances, known as NPS.
The UK's crime prevention minister said the UK was addressing the threat.
Drawing on European Commission data from 2011 and United Nations population statistics, the World Drug Report says the UK is Europe's largest market "for legal substances that imitate the effects of illicit drugs".
But the use of mephedrone - also known as meow meow or M-CAT - has declined in England and Wales since it was banned in 2010, the report said.
Crime Prevention Minister Jeremy Browne said the UK is "leading the global effort to address the serious threat" from legal highs, "adapting and innovating" as new trends emerge.
"We have introduced temporary class drug orders, a swift legislative response to protect the public while our independent experts prepare advice. We are working with law enforcement agencies overseas to break down supply chains and reduce demand."
He added: "Our Forensic Early Warning System and the Advisory Council on the Misuse of Drugs continue to closely monitor the prevalence and availability of these substances."
It said the 670,000 Britons aged between 15 and 24 who had experimented with such substances at least once was 23% of the EU total in 2011.
Close to 5% of people aged 15-24 in the EU have used NPS.
The world's biggest market for NPS is the United States, where use of these substances among youth "appears to be more than twice as widespread as in the European Union".
'Young people misled'
The UNODC said this is an alarming problem, as the substances have not been tested for safety and pose "unforeseen public health challenges".
"Sold openly, including via the internet, NPS…. can be far more dangerous than traditional drugs. Street names, such as spice, meow-meow and bath salts mislead young people into believing that they are indulging in low-risk fun," the report said.
It added that while the use of traditional drugs such as heroin or cocaine is globally stable, new psychoactive substances "are proliferating at an unprecedented rate".
And new substances are being identified all the time.
At the end of 2009, 166 NPS had been identified worldwide. By mid-2012 that had risen to 251.
"For the first time, the number of NPS exceeded the total number of substances under international control (234), " the report said.
The UNODC said authorities are struggling to keep up.
"Given the almost infinite scope to alter the chemical structure of NPS, new formulations are outpacing efforts to impose international control. While law enforcement lags behind, criminals have been quick to tap into this lucrative market."
Many of these new psychoactive substances appear to originate in Asia and are spread via the internet.
The report said the number of online shops offering to supply customers in countries in the EU with NPS increased from 170 in January 2010 to 693 in January 2012.
However the UNODC suggested in Europe, at least, the internet may be used more for the import and wholesale business.
It pointed to an EU survey which says most young consumers in Europe do not tend to buy NPS online, but get their supplies from friends or at parties and nightclubs.
Justice Tettey, from the UNODC, said that while the UK had "a large market in NPS", it had also successfully introduced legislation to bring some of the substances under control.
In 2010-2011, mephedrone was the second most widely misused substance in England and Wales, on a par with cocaine powder, according to the report.
But following an import ban and classification as a Class B substance, mephedrone use has declined, after years of increase.
"We have seen a decrease in use (in the UK) since the legislation got put in place," Mr Tettey said.