Ministers have refused to sign the UK up to European legislation for tackling legal highs.
European Commission proposals for a regulation and directive on new psychoactive substances, which are otherwise known as legal highs, would restrict the UK's ability to control the drugs, crime prevention minister Norman Baker MP said.
Baker said the Government also disputes EU evidence, which estimates 20% of legal highs have a "legitimate use".
A review of legal highs was launched last month by Baker, who joined the Home Office in the last reshuffle, which will consider widening legislation to boost police and law enforcement agencies' powers.
Last month the Home Affairs Select Committee criticised the government and police ailing to get to grips with an "epidemic" of so-called legal highs.
It recommended an over-haul of legislation to tackle the issue.
The decision to opt out of the EC proposals also comes as Britain's relationship with Europe becomes increasingly fraught.
A group of 95 Conservative backbenchers have signed a letter calling for Parliament to be able to block any aspect of European Union legislation, while a fierce debate over EU migrant access to UK benefits and jobs rages on.
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In a statement to parliament, Baker said: "The Coalition Government has decided to opt out of the European Commission's proposals for a regulation and a directive on new psychoactive substances.
"The proposals would, as drafted, fetter the UK's discretion to control different new psychoactive substances, binding the UK to an EU system which would take insufficient account of our national circumstances."
He went on: "We also strongly dispute the evidence base stated in the EU Commission's impact assessment which estimates that 20% of new psychoactive substances have a legitimate use."
Baker said the British Government would remain involved in European Union negotiations to shape the proposals.
Ten ''legal highs'' were identified last year for the first time in the UK by a specialist Government system that targets music festivals and tobacco shops.
A total of 27 new psychoactive substances, also known as legal highs, have now been detected by the Home Office's Forensic Early Warning System since it was set up in January 2011.
Baker added: "The UK is ahead of most other countries in combating the reckless trade in so-called 'legal highs', which has tragically already claimed the lives of far too many young people.
"These proposals would unfortunately hinder rather than help our ability to control psychoactive substances by slowing down action to ban harmful substances when identified.
"We have already banned hundreds of these drugs and our Forensic Early Warning System allows us to closely monitor their availability so we can disrupt their supply.
"But we are not complacent. I have commissioned an expert-led review to look into how our current arrangements can be better tailored to help protect public health and tighten further the supply of such substances."
Official figures also show that the number of deaths being linked to legal highs soared by 80% last year to 52, from 29 in 2011.