Legal highs could be regulated, with producers and sellers forced to gain licences to sell the psychoactive substances, under a new review to be undertaken by the government.
The Home Office is the look at how the UK's laws and enforcement against legal highs, can be improved, as new substances come on the market at a rate of around one a week.
Options to be considered will include widening legislation to ensure police and law enforcement agencies have better-tailored powers.
New Zealand's scheme of regulating the manufacture of legal highs deemed to be low risk, following clinical trials, could also be considered.
The move comes as the Government announces that two new groups of psychoactive substances - NBOMe and Benzofury - will become classified as Class A and B drugs respectively.
Official figures also show that some 52 deaths were linked with legal highs last year.
Crime prevention minister Norman Baker said the move showed the coalition was "determined to clamp down on the reckless trade in so-called legal highs, which has tragically already claimed the lives of far too many young people in our country.
"Despite being marketed as legal alternatives to banned drugs, users cannot be sure of what they contain and the impact they will have on their health. Nor can they even be sure that they are legal.
NBOMe and benzofuran compounds are currently under a temporary banning order, which will become permanent when legislation is passed next year.
The Advisory Council on the Misuse of Drugs (ACMD) last month recommended both substances are banned permanently.
The review will be led by the Home Office, with input from experts in law enforcement, science, health and academia and will present its findings in spring 2014.
Martin Barnes, chief executive of DrugScope, said: "It has been clear for some time that the law has been unable to keep pace with the chemistry when it comes to the production and supply of new drugs.
"As DrugScope's recent Street Drug Trends Survey highlighted, in some areas so-called 'legal highs' are not only being sold online and in 'headshops', but in outlets such as newsagents, petrol stations and take-away food shops.
"However, it is important to remember that the law by itself cannot bring this trade under control.
"It is vital that education and information efforts are significantly enhanced in order to make the public - especially young people - more aware of the risks posed by experimenting with substances of unknown content and origin. These substances are not labelled 'research chemicals' by sellers for nothing."
Shadow crime and security minister Diana Johnson said: "The Home Secretary came into office promising 'swift action' on legal highs. Three years later she is launching a review.
"In the meantime hundreds of substances have come on to the UK market and thousands of sellers have opened up.
"While the Government have failed to act, hundreds of thousands of young people have been trying these drugs, and sadly this has often had fatal consequences.
"Instead of telling local authorities what the law is, the Government should be updating it."