WELLINGTON (AFP) - New Zealand on Thursday banned synthetic drugs after Prime Minister John Key conceded an attempt to regulate the market in so-called "legal highs" had failed.

The sale of products such as synthetic cannabis and legal "party pills", which mimic the effects of drugs like ecstasy, were banned after the government introduced legislation this week following protests from the families of users affected by the substances.

"All psychoactive products will become unapproved from Thursday and it will be an offence to possess, supply or sell them," Health Minister Tony Ryall said.

Under the legislation, supply or manufacture of the drugs can result in a two-year jail term or fine of up to NZ$500,000 (S$542,000).

The law represents a shift in New Zealand's approach to synthetic drugs after it moved to restrict access to them last year without banning them altogether.

Instead, the government allowed about 40 products deemed to be safe by health officials to remain on the market while all other synthetic drugs were declared illegal until their producers could provide clinical proof that they were not harmful.

But families of users, including teenagers, argued the psychoactive drugs still on sale were not safe and Mr Key, who faces an election later this year, admitted the policy had been a mistake.

"In hindsight, we probably should have taken the ultra-conservative view and said no, we'll get rid of the whole lot in one go," he told reporters after announcing the ban.