Beneficiaries who refuse or fail drug tests while applying for jobs will have their welfare cut from mid-2013 under the Government's next round of welfare reforms.
The National-led Government says there are now no consequences for drug-takers who opted out of job applications when faced with a drug test.
Social Development Minister Paula Bennett told the Herald the new Welfare Reform Bill would have new requirements for drug testing, but the finer details were still being finalised.
National's pre-election policy document said beneficiaries who did not apply for a job because a prospective employer asked them to take a drug test would have their benefit cancelled.
If they took the drug test and failed it, they would also be sanctioned.
Mrs Bennett said the requirements would be introduced to Parliament later this year and were expected to be implemented in July 2013. She expected the rules to apply to anyone on the new Job Seekers benefit.
The job-seeker category was made up of 135,000 beneficiaries who the Government expected to be able to work, unless they had serious illness or injury.
Mrs Bennett has previously said that the drug-testing issue was a problem in the forestry industry and also in some regions, such as Northland.
The drug-testing policy was first introduced as part of National's election campaign but was re-emphasised at the weekend by Finance Minister Bill English.
Mr English told TVNZ's Q&A that people who were meant to be available for work should be able to pass drug tests.
"In my electorate, a lot of the jobs available to younger people are in forestry and in the meat-processing industry. I'm told by those employers they often can't employ our own locally unemployed young people because they can't pass a drug test."
He cited a Work and Income job seminar in Ashburton, which found 18 per cent of 74 job-seekers would fail a drug test if asked to take one.
Labour's social development spokeswoman, Jacinda Ardern, said the move went against New Zealand Drug Foundation advice, which said cutting support for drug users would reduce their chances of rehabilitation.
"All of the evidence suggests that responding in the way National has suggested doesn't work. What we need to do is make sure we're working with drug and alcohol programmes to ensure that person is able to be employed."
She said the problem of drug use should be addressed through increased drug counselling and support services.
Asked whether cutting support for drug users could deter people from applying for jobs, Mrs Bennett said: "It is not unreasonable that if an employer has a requirement that a prospective employee passes a drug test, then those on benefits be able to pass the test."
National's policy document said if there was doubt about whether a person was a recreational drug user or suffering from addiction, professional medical advice would be sought.
The Government's reforms also proposed cutting welfare to people on the run from police. Beneficiaries wanted by police would have seven days to turn themselves in and prove to Work and Income they had done so, or they would lose their benefit.