The drug became popular in the early 1990s
Doctors and drug workers in Bristol have established a link between the use of Class C drug ketamine and severe bladder and kidney problems.
A BBC investigation for Inside Out West found a rising number of ketamine users in their teens and 20s were admitted to Southmead Hospital over the past year.
Many had to undergo operations - two even needed their bladders removing.
Doctors at the hospital conducted further research and discovered a similar pattern across the UK.
Ketamine is a short-acting but powerful general anaesthetic which depresses the nervous system and causes a temporary loss of body sensation.
In the early 1990s the drug started becoming popular on the UK club scene as people bought it in the mistaken belief it was ecstasy.
It was made illegal in January 2006 when the government classified it as a Class C drug.
The drug comes in various forms, most commonly as a powder, but also as a liquid and a tablet.
The British Crime Survey for 2008 revealed its use was up 10% on the previous year.
The BBC researchers found many users were unaware of the long-term effects of the drug on their health.
Symptoms include pains in the stomach and kidneys, wanting to go to the toilet all the time, often getting up in the night as many as 30 times, and finding the process agonising.
During 2008 the Bristol Drugs Project said there had been a noticeable increase in the number of ketamine users asking for help.
One anonymous user, who is now waiting for bladder reconstruction surgery, told a BBC researcher: "Doctors told me the capacity of my bladder had shrunk.
"It was actually physically shrivelled and scarred, there was an awful lot of scar tissue.
"A lot of the muscle around the outside, which obviously helps your bladder contract and which is what makes you go, a lot of that had been eaten away by the ketamine."
The programme found there are other similar cases on waiting lists in Bristol.
Operations have also been carried out in London and Liverpool.
David Gillatt, a consultant urologist at Southmead Hospital, said: "This is a worrying development as major bladder operations, such as the ones they're now carrying out, are normally performed on a much older age group.
"We have got cases who've had to go as far as major surgery to remove the bladder and that's a fairly big step.
"These people are often in their teens through to 20s, maybe 30s at the oldest, and that's something they'll have to live with for the rest of their days."
Professor David Nutt, who chairs the government's drug advisory panel, is being kept regularly updated on the latest developments in the research in Bristol.
The full story features on Inside Out West on BBC One West at 1930 GMT on Wednesday.