Clubbers' drug GHB, which has also been linked with date rapes, will be outlawed from midnight on Monday.
GHB has been linked with rape and sexual assaults
Dealers in the drug will face up to five years in jail and possession will carry up to two years as it becomes a class C drug, Home Office minister Caroline Flint said.
Campaigners welcomed the move, saying it would give police more powers to prevent drug-assisted rapes.
The drug acts as an "upper" in small doses, but larger amounts produce an anaesthetic effect which can put people into a coma and even cause their death.
Although GHB is known as a 'date rape' and clubbers' drug, it is also used by some body-builders to increase their muscles.
Also nicknamed liquid ecstasy, it is potentially lethal when mixed with other substances, particularly alcohol.
It is currently not illegal to possess GHB, but unlicensed supply can be an offence under the Medicines Act.
The drug is usually sold in liquid form - a 30ml plastic bottle costs about £15 - but can also be bought as a powder.
It is usually bought over the internet, by mail-order or in sex-shops.
The Advisory Council on the Misuse of Drugs (ACMD) said gammahydroxybutrate, or GHB, was being "widely misused and has harmful effects".
"GHB has been used in numerous drug-assisted rapes and sexual assaults," Ms Flint said.
"By introducing jail terms for its possession and increasing them for supply we hope to help prevent the most despicable of crimes.
"It's very important that we get the message across to club-goers that this is a dangerous drug."
The move was welcomed by The Roofie Foundation - the street name for the pills is "roofies" - which runs a drug-rape helpline.
"We welcome any action that will give the police more tools in their armoury to combat the drug rapist," chief executive Graham Rhodes said.
"People have been getting away with using this drug for long enough."
About 5,500 people had rung the helpline in the eight years since it started, he said.
However, campaign group Women Against Rape said the decision was unlikely to "make any substantial difference on the ground".
"People can pass out after just a few drops in an alcoholic drink, and an overdose could result in a coma."
In a recent American case involving GHB, Max Factor heir Andrew Luster was convicted of rape and jailed for 124 years in California after being convicted of using GHB in rapes.
Illegal from midnight 30 June
Small doses can induce a high, and large doses an anaesthetic effect
Nicknames include liquid ecstasy and GBH
Linked with rape and sexual assaults
Sold in liquid and powder form
Dealers face five years jail
Prison term of up to two years for possession
Luster, 39, the great-grandson of cosmetics legend Max Factor, took three women to his home between 1996 and 2000 and raped them after giving them the drug.
He was recaptured by a bounty hunter in Mexico this month.
And last month a Welsh man was jailed for 10 years after tricking a woman into drinking GHB before sexually assaulting her.
Seven other substances will also be banned at the same time, including two opiates which will be placed on the class A list alongside heroin and crack cocaine.