The Government has ruled out universal drug testing of all beneficiaries, with drug and alcohol addicts being exempted from sanctions for refusing or failing a drug test when applying for a job.
Social Development Minister Paula Bennett said there were no plans to make a drug test a condition of going on a benefit and about 6100 people who were on sickness or invalid's benefits because of drug or alcohol abuse or addiction would be exempt.
Those assessed as having a genuine addiction in the future would also be exempt.
That group did not have work testing requirements until their doctor deemed them ready for work. There was currently no obligation for them to get any form of treatment for their addiction, but Ms Bennett indicated that could change.
"We're still working our way through that policy detail."
Prime Minister John Key said there were no plans to drug-test all beneficiaries, and arguments that drug users were using welfare to pay for their drugs could also be applied to other areas, such as smoking and alcohol.
"Some people would say people on benefits shouldn't smoke or shouldn't drink. Everyone has their own views on those matters. For the most part, other than very young people, we are leaving people to make their own assessment but our expectations are clear - if you can work, you should work and if the only reason you're not working is because you're failing a drug test because of recreational drug use, we think that's unacceptable and the Government is going to do something about that."
Ms Bennett said full details of the sanctions against recreational drug users were yet to be finalised but it was likely someone who failed an initial drug test by an employer would be given a grace period of three to four weeks to return "clean". If they then failed a drug test, they would be sanctioned by losing part of their benefit. They could later recoup that by staying clean - but would lose more if they kept reporting back with drugs in their system.
It was yet to be decided whether the follow-up drug tests, which cost about $77, would be organised by Work and Income itself or left to employers as part of their usual job screening.
Ms Bennett said it was possible Work and Income - which did no drug testing itself at present - would reimburse employers if a beneficiary failed an employer's drug test.
"We are worried they might not take on beneficiaries if they think they won't pass and they then have to cover that cost. So the way the policy is looking is that we will pay for the drug test if it is positive."
She said the grace period had to take into account the length of time it took for drugs to leave the body. Drug testing experts had advised her that while drugs such as P left the body within days, traces of marijuana could still be detected weeks later.
Drug Foundation executive director Ross Bell said the penalties might work on recreational users, but the policy did not address the bigger problem of those with real addictions.
"It's going to be difficult to implement and the big question remains: once you identify someone with a problem, how do you get them the help required? There is a group of people who are drug dependent and no amount of stick will shift them, I don't think."
Mr Bell said drug-testing policies overseas had not worked - British Prime Minister David Cameron's Government had backed away from a similar policy and in Florida mandatory drug tests to get welfare benefits prompted legal challenges from human rights groups, which said it cost more to reimburse applicants who passed the test than it would have to pay for the benefits of those who failed.