The use of cannabis for medicinal purposes is to be reviewed, which could lead to patients being prescribed drugs made from the plant, Home Secretary Sajid Javid has said.
The decision was prompted by recent high-profile cases of children with severe epilepsy being denied access to cannabis oil to control seizures.
He said the position "we find ourselves in currently is not satisfactory".
But he stressed the drug would remain banned for recreational use.
Shadow home secretary Diane Abbott welcomed the announcement, telling MPs that it was "long overdue".
Speaking to the House of Commons, Mr Javid said the cases of Alfie Dingley and Billy Caldwell had made him conclude it was time to review the use of cannabis for medicinal purposes.
He also announced that six-year-old Alfie, who has a very rare form of epilepsy that causes up to 150 seizures per month, was being issued with a licence to receive cannabis-based drugs.
His family had originally applied to the government in April, saying his condition improved after using it in the Netherlands
Meanwhile, Billy, 12, was granted a 20-day licence for the drug last week after doctors made clear it was a medical emergency.
He was admitted to hospital after his seizures "intensified" when his supply was confiscated at Heathrow airport.
His mother Charlotte Caldwell, who has campaigned for the government review, said it was a "clearly largely positive" announcement but added "we still want to hear the details".
The review would be held in two parts, Mr Javid told MPs. The first will make recommendations on which cannabis-based medicines might offer real medical and therapeutic benefits to patients.
In the second part, the Advisory Council on the Misuse of Drugs will consider whether changes should be made to the classification of these products after assessing "the balance of harms and public health needs".
He said: "If the review identifies significant medical benefits, then we do intend to reschedule."
But he added: "This step is in no way a first step to the legalisation of cannabis for recreational use."