Party drug "meow meow" or mephedrone, used as a replacement for ecstasy or cocaine, and termed Britain's "favourite new drug" has caused nearly 100 deaths of young people in the past two years.
Banned last year, mephedrone has been blamed for causing 19 users to commit suicide. At least one person dies every week after taking the drug.
The report was published by government drug advisers -- Advisory Council on the Misuse of Drugs, the Daily Mail reported.
Les Iversen, chairman of the advisory council, called for new laws to deal with the "uncontrolled market".
He said many buying the substances were people who would "never dream of going to a back-street drug dealer, but who are happy to take out their mobile phone and credit card and order it to be delivered to their home".
Use of mephedrone -- taken in powder form, often as a substitute for cocaine -- was criminalised last year.
The report found mephedrone caused or contributed to 42 deaths between late 2009 and October this year. Tests are still being carried out in another 56 suspected cases.
Mephedrone has also been implicated in a number of deaths where users have become depressed and committed suicide.
The report also urged ministers to put pressure on countries such as China to crack down on websites known to be smuggling drugs to Britain.
The popularity of "meow meow" has been linked to its cheapness and easy availability. Clubbing magazine Mixmag last year christened mephedrone Britain's "favourite new drug".
Unlike cocaine, the effects of the drug were unlikely to be cut with baking soda, paracetamol or other substances.
It is most often snorted in powder form but can also be obtained in capsules.
Side-effects include headaches, palpitations, nausea, high blood pressure, a burning throat, nose bleeds and purple joints, especially the knees and hands.