The government call cannabis a "significant public health issue"
People caught with cannabis twice could face an £80 on-the-spot fine, under government plans.
Ministers will consult on the proposals which would also see people arrested if caught in possession for a third time.
Cannabis is to be made a Class B drug again from January 2009, five years after it was downgraded to Class C.
The independent drugs advisory council recommended it should remain Class C. Ministers say they must take account of potential long-term effects on users.
Announcing the Penalty Notice for Disorder proposals, which would apply to England and Wales, the government said cannabis posed a "real risk" to users' health and stronger strains were now dominating the market which could increase mental health problems.
It said the new penalties were not aimed a "criminalising people unnecessarily" but would give police and the courts "a range of sanctions at their disposal so that the punishment is proportionate to the offence".
Tim Hollins, from the Association of Chief Police Officers (Acpo), said police would take a harder line when "cannabis use is repeated or there are aggravating circumstances locally".
Home Secretary Jacqui Smith said: "While cannabis has always been illegal, reclassifying it to a Class B drug reinforces our message to everyone that it is harmful and should not be taken."
"This is the next step towards toughening up our enforcement response to ensure that repeat offenders know that we are serious about tackling the danger that the drug poses to individuals."
The government says it is responding to calls from the Acpo for a stronger approach to possession of cannabis.
Possession of a class C drug is treated largely as a non-arrestable offence. Making it a Class B drug means the maximum prison sentence for possession rises from two years to five years.
It is five years since the decision was taken to downgrade cannabis, with the aim at the time of freeing up police resources to concentrate on tackling hard drugs like heroin and cocaine.
Ministers say that since then concern has risen about the prevalence of stronger "skunk" varieties of cannabis which the government says now account for 80% of the cannabis seized on the streets.
The government accepted 20 of 21 recommendations from the Advisory Council on the Misuse of Drugs, which had said cannabis should remain a class C drug, arguing the risks were not as serious as those of class B substances, such as amphetamines and barbiturates.
It described cannabis as a "significant public health issue" and said the evidence suggested a "probable, but weak, causal link between psychotic illness, including schizophrenia, and cannabis use". But it said, in the population as a whole, it played only a "modest role" in the development of these conditions.
In its response to the ACMD report, the government said: "We do not reject the advisory council's advice on this specific issue lightly but it is the role of government to make decisions informed by all relevant factors and to take account of potential long-term impacts where the evidence is not conclusive at this time."
Lib Dem Home Affairs spokesman Chris Huhne has suggested that, if the government is to disregard the advice of the independent council, it should disband it in favour of an advisory council of "tabloid newspaper editors". The Conservatives have said the reclassification shows it was a mistake to downgrade it in the first place.
The ACMD is carrying out a review of the Class A drug ecstasy and has already met to consider whether it should be downgraded to Class B.