The friends are thought to have died after taking the drug
Teachers may confiscate mephedrone from pupils although it is not illegal, the schools minister has said.
It was feared that teachers were unable to seize the drug and other "legal highs" under the existing law.
But Schools Minister Vernon Coaker has written to every school in England telling them they can seize the drugs under existing rules.
Mephedrone has been linked to the deaths of Louis Wainwright, 18, and Nicholas Smith, 19, in Scunthorpe.
In the letter, Mr Coaker said the law gave teachers the powers to confiscate "all inappropriate items" irrespective of their legal status.
Schools are also under no obligation to return confiscated substances, he said.
The government's drug advisory body, the Advisory Council on the Misuse of Drugs (ACMD) is to present its guidance on the drug on 29 March.
Some head teachers say the drug should be made illegal immediately - even if it risks some children getting a criminal record.
They have become increasingly worried that because the drug is legal, children as young as 12 are trying it.
Mephedrone has become popular on the UK club scene in recent months and is said to have effects similar to ecstasy.
Side effects are said to include psychosis, palpitations, burning throat, nosebleeds and insomnia.
The two teenagers who died were found collapsed at their homes after a night out drinking in Scunthorpe.
Humberside Police said the drug appeared to have contributed to their deaths.