Ketamine, the horse tranquiliser used as a party drug, is to be upgraded to a Class B banned substance.
Crime Prevention Minister Norman Baker said he hoped to send a message that the drug was harmful.
Ketamine will be reclassified from Class C to B in the face of mounting evidence over its physical and psychological dangers.
Evidence has emerged of users as young as 20 having their bladders removed due to heavy consumption of the drug.
Reclassification will mean the maximum penalty for unlawful possession of ketamine will increase from two to five years in jail, while the maximum penalty for trafficking offences will continue to be 14 years imprisonment.
But speaking at a drug treatment centre in west London, Mr Baker said: "I'm not sure in the very long term that the present system is a perfect one for drug control.
"What I do think is in the short term there's a message that needs to be sent on ketamine. In terms of where we're going in 20 or 30 years time, in terms of the optimum method of minimising drug use then I'm not sure.
"It certainly after all hasn't stopped drug use by classification. But what it does do is send a message to those who are interested.
"You have to assume some drug users actually care about their bodies, therefore saying to them this is more dangerous than that, what they will take into account and what they will actually do."
The confirmation that it would be upgraded came after the Advisory Council on the Misuse of Drugs, the government's advisory body, said new evidence had shown frequent ketamine use could cause "severe and disabling" bladder damage.
Home Office figures released last summer indicated that in the previous year about 120,000 people aged 16-59 in England and Wales had taken ketamine.