An anaesthetic used by vets as a horse tranquiliser but becoming increasingly common on Britain's dance scene is to be made illegal.
Ketamine, nicknamed "special K", is currently legal but will become a Class C drug from 1 January.
In September, charity DrugScope revealed the gaining popularity of the hallucinogen in the UK.
Researchers surveying drug prices in 15 towns and cities found ketamine on sale in eight.
It did not feature at all in the same survey a year earlier.
"Although ketamine use is relatively low in the UK, there has been an increase in use by clubbers in recent years," Home Office minister Paul Goggins said.
"Ketamine presents serious health risks and must be subject to strict controls to provide a considerable deterrent to those seeking to import and supply the drug."
Ketamine is a general anaesthetic which has been used in hospitals and in veterinary medicine since the 1970s.
Among recreational users it can be taken in powder, tablet or liquid form.
Effects depend on the dose but users report euphoria, hallucinations and "dissociative" feelings in which mind and body seem to separate.
Ketamine can be dangerous when taken in conjunction with alcohol or other depressants, and users can be unable to move or feel pain while on the drug.
Anecdotal evidence suggests that ketamine use has been gradually increasing for several years - particularly on the gay scene - but it has recently become popular among mainstream club-goers.
Other changes in the drug laws to be introduced on New Year's Day include stiffer sentences for dealers selling drugs near schools or using children as couriers.
Under the Drugs Act 2005, police will also be able to ask for X-rays or ultrasounds of dealers who they suspect of swallowing Class A drugs.
And the maximum amount of time suspected "drug mules" can be held in custody will be increased from 96 hours to 192 hours to allow time for packages to pass through their system.