Home Secretary David Blunkett today said possession of cannabis should no longer be an arrestable offence, heralding a massive shake-up of drugs policy.
He proposed reclassifying the drug as "Class C", putting it in the same category as anti-depressants and steroids.
Mr Blunkett denied the move was decriminalisation by another name and stressed the drug will remain illegal.
But in practice, cannabis smokers will be unlikely to face any consequences if they are caught with small amounts of the drug.
If cannabis is re-graded as Class C, the maximum sentence for possession would be two years in Crown Courts or three months in magistrates courts.
Only offences punishable with at least five years imprisonment are arrestable.
Possession with intent to supply or supplying Class C drugs carry a five year maximum.
Today's move is designed to free police time to concentrate on hard drugs like heroin and cocaine, removing the "policing anomaly" which means nearly seven out of 10 drug arrests are for a relatively harmless drug.
"Re-classification would be quite different from decriminalisation or legalisation," said Mr Blunkett.
"Cannabis would remain a controlled drug and using it a criminal offence.
"It would not detract from the simple message that all drugs are harmful and that no-one should take drugs.
"But it would make clearer the distinction between cannabis and Class A drugs like heroin and cocaine.
"Above all it would make sense to both those policing the system and those providing education and advice to prevent young people falling into addiction."
Conceding that the law is lagging far behind public attitudes to cannabis, he added: "In spite of our focus on hard drugs, the majority of police time is currently spent on handling cannabis offences.
"It is time for an honest and common sense approach focusing effectively on drugs that cause most harm.
"Given this background, and the very clear difference between cannabis and Class A drugs, I want to consult the medical and scientific professionals on re-classifying cannabis from Class B to Class C."
The police are believed to be concerned at the prospect of losing the power to arrest someone for possession but ministers are not proposing to take options which are open to them to retain it as an arrestable offence under its new Class C status.
"They will still have plenty of powers to stop people but possession of cannabis won't be one of them," said a Home Office spokesman.
There will be discussions with senior police officers while the change is being considered by the Advisory Council on the Misuse of Drugs.
Mr Blunkett said he wants the ACMD to report back within three months and make a final decision on the proposals next spring.
Mr Blunkett said the number of 16 to 19-year-olds using drugs in the last year fell but added: "We must all be concerned at the increasing numbers of young people using cocaine and the corrosive effects of cocaine and heroin on our communities.
"We need to warn young people that all drugs are dangerous, but Class A drugs such as heroin and cocaine are the most harmful.
"We will only be successful at delivering this message if our policy as a whole is balanced and credible."
The Home Secretary said a campaign would be launched in December to spell out the dangers of drug taking and there would be an extra Â£1 million to fund a pilot project tackling regional drug traffickers.
Mr Blunkett also said that if current clinical trials are successful he will change the law to allow the use of cannabis-based prescription drugs to combat conditions such as multiple sclerosis and arthritis.
A group of key experts has been set up to develop an action plan to tackle the treatment of crack and cocaine, and with the Department of Health would be producing new guidance for heroin prescribing.
"This will work towards providing a bridge between those who are obtaining heroin illegally, often through criminal activity, and the methadone treatment prescribing.
"It would be under highly secure and strict procedures and would allow the transfer into treatment without the current risks that exist to heroin users," he said.
In 1999, some 68% of the 120,000 drugs offences had been cannabis-related with each one taking officers two to three hours to process.
Today's proposals would help "marry up reality with the law as it stands" but were not a move towards reclassification of harder drugs, said a Home Office official.
"The central issue is that heroin and cocaine are still the most damaging, and Class A drugs in general. At the moment that is somewhat blurred - it's about striking a balance," he said.
"The bottom line is all drugs are harmful. This is not a stepping stone nor a move towards the Dutch-style model or decriminalisation by another name.
"Two years in the slammer is still there as the ultimate sanction."
A Labour backbencher, Jon Owen Jones, whose bill to legalise cannabis comes before the House of Commons on Friday, welcomed the Home Secretary's announcement but said it did not go far enough.
The MP for Cardiff Central said: "The Home Secretary is to be commended. He was clearly serious when he asked for an adult and intelligent debate on drug policies.
"This is the first step towards a sensible drug policy as well as an acknowledgement that the present policies are not working. Harsh criminal penalties are not the way to deal with cannabis use.
"However, this move alone does not go far enough. Cannabis use is clearly very prevalent in this country and does no noticeable harm.
"Although this essentially decriminalises cannabis use and possession itleaves cannabis supply in the hands of criminal gangs.
"We should legalise it to prevent gangsters from making huge profits and prevent them from coming into contact with young people, 45% of whom have tried cannabis."Reuse content