"If we could find a better way forward, we should take it," said Mr Barr, the Cessnock MP and Labor Party member.

Mr Barr has dealt with a number of families whose lives have "sadly been torn apart by their son or daughter's use of ice".

"They end up in the legal system and it just spirals."

He said there were "no guarantees that a softer approach to drugs would make any of these people's lives better or worse".

"But the reality is we have a very strong and strict legal framework around ice, yet I'm still dealing with families whose lives have been torn apart by that drug."

The Berejiklian cabinet has discussed a plan to introduce a warning system for possession of small amounts of drugs.

Under the plan, those caught with substances for personal use would receive a warning for the first offence and fines for second and third offences. If a fourth offence was detected within a 12-month period, only then would criminal action occur.

NSW Attorney-General Mark Speakman tabled the plan for discussion. Some ministers reportedly offered support, while others opposed it. The plan was subsequently leaked to the media. This sparked a wave of moral panic in the tabloid media, as conservative MPs feared being seen as "soft on drugs".

However, the plan was created in response to the Special Commission of Inquiry into the Drug Ice, which recommended drug decriminalisation. The government has ruled out decriminalising drugs, but its plan for warnings and fines has been described as "depenalisation" and a way to "keep people out of court who should never be in court".

Mr Barr highlighted the hypocrisy of punishing people for possessing small amounts of illegal drugs, while alcohol and tobacco were legal.

Asked if people should have a right to use drugs for health and recreational reasons, he said rights come with responsibilities.

"Sadly and unfortunately what we know with drugs is that some people become addicted," he said, adding that this applied to a small percentage of drug users.

But some found their addiction "impossible to finance without a life of crime". This, he said, affects the rights of others to "a safe environment where people aren't stealing".

On this point, he said the Carr government introduced safe injecting rooms after the NSW drug summit in 1999.

"At the time, that was dressed up as outrageous and the sky was going to fall," he said.

But the safe injecting rooms "saved hundreds if not thousands of lives".

"It's managed to get possibly thousands of people off the drugs by treating it as a health issue, as opposed to a criminal issue. And the sky didn't fall," he said.

He cited relaxed cannabis laws in many states of America as another example of change happening in drug policy across the world, after which "the sky hasn't fallen".

He said the current system in NSW deterred young people from seeking help for drug addiction because "they have to admit to an illegal behaviour".

And experts in drug rehabilitation and sentencing had been saying for years that drug use should be considered a health and social issue, rather than a crime.

Cabinet is due to reconsider the matter on December 14.