The Police Foundation study will be carried out by a committee that will include Simon Jenkins, former editor of the Times, and leading lawyers, academics and police officers expert in drugs law.
They are expected to focus on whether the law needs to be changed in the light of a growing drugs culture and the Government's commitment to tackle drug-related crime. Members will take written and oral opinions from experts.
Other charities, including the Prince's Trust, will fund the two-year inquiry.
Barrie Irving, director of the Foundation, said: "Youth culture and the drugs issue have moved on since 1971.
"We realise that this is a sensitive field but independent and objective review is long overdue. Legislation is designed for a particular time and set of problems. Periodic review is essential."
The 12-member committee is expected to look at the original aims of the Act and to decide whether to propose any revisions to the law.
Its chairman, Viscountess Runciman, who also heads the Mental Health Commission, said the purpose was not to pave the way for the gradual decriminalisation of drugs. "The inquiry is not a lobbying exercise on behalf of any of the positions on this subject," she said.
"It is certainly not a covert attempt to smooth the path to legislation. Neither is it a device designed to bolster a law that may be perceived as failing to best serve those it is meant to assist."
She added: "Clearly there are a range of views on the misuse of drugs and we intend to consult widely with those who have experience in the area."
Viscountess Runciman said that one task would be to examine what decriminalisation and legalisation of drugs would mean.Reuse content