Five out of every six people caught with cannabis escaped prosecution last year - despite the fact Labour has reclassified it as a more serious drug.
More than 160,000 people were found in possession of cannabis in 2008-09 but just 27,500 ended up in court, according to Home Office figures.
The leniency was highlighted despite police statistics showing a 40 per cent increase in the number of people caught with the drug in just 12 months.
The figures will prompt critics to claim that Labour has failed to tackle the problem.
In recent months, a succession of parents have spoken of the devastating impact the drug - particularly the potent form known as skunk - has had on their children's mental health.
The Government upgraded cannabis from a Class C drug to the more serious Class B in January last year, meaning those caught in possession could face up to five years in jail.
Announcing the move, the then Home Secretary Jacqui Smith told MPs: 'There is a compelling case for us to act now rather than risk young people's health. We must err on the side of caution and protect the public.'
But the change - which was supposed to reflect the Government's tougher stance on the drug - has led to only a slight increase in prosecutions over the previous year, when one in seven users faced charges.
Instead of taking people to court, police are handing out thousands of warnings or cautions in a situation politicians have described as chaotic.
The latest figures show that almost 67 per cent of those in possession of cannabis are given a 'street warning', 16 per cent are given an official caution and 17 per cent are charged.
Verbal warnings are not recorded, although some forces ask people to sign a document confirming the reprimand, and are mostly used for first-time offenders.
Shadow Home Secretary Chris Grayling said: 'This Government's policy on cannabis has been all over the place, so it's hardly surprising that the policing of cannabis use is chaotic too. If Ministers give out muddled messages they shouldn't be surprised if the result is confusion.'
The data also shows huge variations in the way cannabis users are treated by forces across England and Wales.
In Gwent just ten per cent are charged but in Northumbria the figure is 34 per cent. The Metropolitan Police and forces in Leicestershire, Cambridgeshire, Staffordshire and Warwickshire all charge around one in eight of those caught with the drug. The Met issued the most street warnings - 47,204, or in four out of five cases.
The Government downgraded cannabis to a Class C substance in 2004 and introduced verbal warnings for possession of the drug.
But Gordon Brown ordered a review within days of becoming Prime Minister in 2007 because of fears that its skunk variety could cause serious health problems, including schizophrenia.
The Home Office said the issue was a matter for individual forces. 'Police must have a proportionate response to cannabis possession. It is simply not practical to seek prosecutions for high-volume, low-level offences.'
By Jo Macfarlane
February 20, 2010