Ketamine has successfully been used to treat NHS patients with serious depression.
Infusions of the illegal substance had a rapid beneficial effect on patients who were not responding to more orthodox treatments.
Some were suffering from unremitting depression that had plagued them for years despite various drugs and talking therapies.
Although many patients taking part in the trial at Oxford Health NHS Foundation Trust relapsed within a day or two, almost 30% showed improvements lasting at least three weeks.
In 15% of cases, patients took more than two months to relapse and some benefited for eight months.
Ketamine, a horse tranquilliser, has become a popular recreational drug on the dance club scene.
It is due to be upgraded from Class C to B amid increasing concern over its physical and psychological effects.
There is evidence of users as young as 20 having their bladders removed due to heavy consumption of the drug.
But the doses used in the patient trial were much lower than those on the street and side effects were minimal, even though the drug was injected rather than swallowed.
Psychiatrist Dr Rupert McShane, from Oxford University, said: "Ketamine is a promising new antidepressant which works in a different way to existing antidepressants.
"We wanted to see whether it would be safe if given repeatedly and whether it would be practical in an NHS setting. We especially wanted to check that repeated infusions didn't cause cognitive problems."
He added: "We've seen remarkable changes in people who've had severe depression for many years that no other treatment has touched. It's very moving to witness.
"Patients often comment that that the flow of their thinking seems suddenly freer.
"For some, even a brief experience of response helps them to realise that they can get better and this gives hope."
Results from the first 28 patients treated with ketamine are reported in the Journal of Psychopharmacology.
Either three or six infusions of up to 80 milligrams of ketamine were administered during the three-week course of treatment.
Memory tests were conducted a few days later and patients reported their mood symptoms daily via text or email.
None of the patients suffered memory or bladder problems. Some became anxious, a few were sick and one fainted.
Most trial participants experienced temporary "dissociative" effects, marked by distorted perceptions and a feeling of being disconnected with their body, while the infusions were taking place.
A total of 400 infusions have now been given to 45 patients.
"Intravenous ketamine is an inexpensive drug which has a dramatic, but often short-term, effect in some patients whose lives are blighted by chronic severe depression," said Dr McShane.
"We now need to build up clinical experience with ketamine in a small number of carefully monitored patients.
"By trying different infusion regimes and adding other licensed drugs, we hope to find simple ways to prolong its dramatic effect."
As a Class B drug, the maximum penalty unlawful possession will increase from two to five years imprisonment. The maximum penalty for trafficking offences will continue to be 14 years in jail.