Afghan opium poppies should be used to make pharmaceutical products such as diamorphine rather than be destroyed, the Conservatives have said.
Afghanistan is the largest producer of opium in the world
Lord Howell told the House of Lords licensing farmers could stop their poppies being used to make heroin.
But Labour peer Baroness Amos said Afghanistan's central government had no mechanisms to set up such a system.
The UK has a diamorphine shortage, but the main problem is with manufacturing, rather than supply of raw materials.
Diamorphine, also known as heroin, is used to relieve pain after operations and for the terminally ill.
Lord Howell told the Lords the "very dangerous" policy of eradication was "just not working".
"The more we try to eradicate, the more poppies seem to get grown," he said.
Alternative ideas such as controlled licensing of poppy growing for pharmaceutical products needed to be tried, he said.
He suggested targeting traffickers instead of the farmers.
"Trying to stop poor farmers growing poppies to survive and live and feed their families is going to be almost impossible," he said.
Lords Leader Baroness Amos, a government spokesman on international development, said an integrated strategy was needed.
She admitted "eradication on its own will not solve the problem" but said alternative crops were being encouraged.
She said licensing production would mean traffickers would still be "free to continue to exploit the illicit market".
Dr Vivienne Nathanson, of the British Medical Association, said doctors were "extremely concerned" about the shortage of diamorphine in the UK.
"It is vitally important that the manufacturing issue is resolved so that sufficient diamorphine supplies are available."