A clinical trial of "magic mushroom therapy" could take place in the UK within a year following two ground-breaking studies.
Doctors plan to treat depressed patients who cannot be helped by modern drugs or behaviour-based psychotherapy with the active ingredient in hallucinogenic mushrooms.
Psilocybin would slowly be infused into their bloodstreams while they receive a carefully tailored "talking therapy".
The controversial trial is planned by Professor David Nutt, from Imperial College London, who three years ago was sacked as the Government's chief drug adviser.
Prof Nutt, former chairman of the Advisory Committee on the Misuse of Drugs (ACMD) clashed with then Home Secretary Alan Johnson after criticising the decision to toughen the law on cannabis.
The move to investigate psilocybin as a possible treatment for serious depression is linked to results from two far-reaching scientific studies.
In one, volunteers were given psilocybin infusions while undergoing functional magnetic resonance imaging (fMRI) brain scans.
The findings, reported today in the journal Proceedings of the National Academy of Sciences, showed the drug disconnected two key "hub" regions of the brain with multiple connections to other areas.
One of these regions, the medial prefrontal cortex (mPFC) is known to be hyperactive in people with depression. The other, the posterior cingulate cortex (PCC) at the back of the brain, is thought to play a role in consciousness and self-identity.
The second study, soon to be published in the British Journal of Psychiatry, found that the magic mushroom chemical enhanced memories associated with positive emotions.
Speaking to journalists in London today, Professor Nutt said the findings were "a revelation".
"Psychedelics are thought of as 'mind-expanding' drugs so it has commonly been assumed that they work by increasing brain activity, but surprisingly, we found that psilocybin actually caused activity to decrease in areas that have the densest connections with other areas.
"These hubs constrain our experience of the world and keep it orderly. We now know that deactivating these regions leads to a state in which the world is experienced as strange."
It is the first time serious research has been carried out on the effects of "psychedelic" drugs for more than 50 years.
In the 1950s and 1960s, scientists investigating drugs such as LSD and psilocybin carried out studies on around 40,000 patients and published 1,000 papers. Such work was brought to an abrupt halt when the drugs came to be seen as social evils and were made illegal.
"They got banned because they could be society changing," said Professor Nutt. "There was great concern about that. Since then they've been virtually impossible to research."
Neither the Medical Research Council (MRC) nor the Wellcome Trust, Britain's biggest research charity, had been willing to fund the new studies. And both Nature and Science, the two most prestigious scientific journals, refused to publish the findings.
Now the MRC is said to be showing interest in the planned clinical trial, which Professor Nutt believes could be undertaken this year with sufficient backing.
A group of 26 patients with a history of serious depression that cannot be treated with drugs or cognitive behavioural therapy (CBT) is expected to take part.
Half will be treated with psilocybin while trained psychotherapists prompt them to recollect happy memories and think positively.
After the treatment, the patients' progress will be monitored for a year. Their responses will be compared with those of a "placebo group" of another 13 patients given infusions of a salt solution containing no psilocybin.
Professor Nutt stressed that people should not be tempted to conduct their own experiments with magic mushrooms.
"This is a research tool which may give us insights into how to treat depression," he said. "I would strongly resist people self-medicating."
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