Laughing gas will become illegal in November, with dealers facing up to 14 years in prison.
The Home Office said having nitrous oxide will be banned from November 8 and serious repeat offenders could be jailed for up to two years.
The nitrous oxide ban was promised as part of the Government’s Anti-Social Behaviour Action Plan and it will make the substance a controlled class C drug under the Misuse of Drugs Act 1971.
Secondary legislation laid on Wednesday will mean possession of nitrous oxide, where a person intends to wrongfully inhale it, will be an offence.
Users could receive an unlimited fine, a visible community punishment, a caution which would appear on their criminal record or a prison sentence, the Home Office said.
Those with a legitimate reason for having the drug will be exempt from the ban, the Home Office added.
The drug is used in maternity wards as a pain relief during labour and is also used in the catering sector.
Nitrous oxide is the third most used drug among 16 to 24-year-olds in England and police have reported links to antisocial behaviour – intimidating gatherings on high streets and in children’s parks, and empty canisters strewn across public spaces, the Home Office added.
Crime and policing minister Chris Philp said: “We are delivering on the promise we made to take a zero-tolerance approach towards antisocial behaviour and flagrant drug taking in our public spaces.
“Abuse of nitrous oxide is also dangerous to people’s health and today we are sending a clear signal to young people that there are consequences for misusing drugs. Both users and dealers will face the full force of the law for their actions.”
Waste crews who cleaned up at Notting Hill Carnival in August estimated they collected 13 tonnes of laughing gas canisters from the streets, Kensington and Chelsea Council said.
Crews filled five skips with an estimated 12,000-plus canisters.
Chief executive of Night-time Industries Association Michael Kill said: “We welcome the announcement by the Government today that nitrous oxide is set to be banned under new Government legislation by November 8 but recognise that this must work hand in hand with a much broader education and harm-reduction strategy on drugs across the country.
“The burden on businesses has been substantial, as they’ve contended with mounting pressure from authorities and residents due to the proliferation of discarded silver canisters on the streets.
“This predicament has not only posed risks to the wellbeing of both staff and patrons but has also fostered an environment conducive to petty crime, antisocial behaviour and the activities of organised crime syndicates.”
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