The guidance on an amendment to Section 8 of the Misuse of Drugs Act gives the police the right to decide whether to prosecute charity staff, such as drug treatment workers, those working with rough sleepers and social housing landlords, who permit the supply or use of controlled drugs on their premises. Charities have until 8 November to respond.
It follows the case of the "Cambridge Two", charity workers Ruth Wyner and John Brock, who were jailed in December 1999 for "knowingly permitting" the supply of heroin at a homelessness day centre in Cambridge. They were later freed by the Court of Appeal but their convictions were upheld.
An amendment to Section 8 was passed by Parliament in May 2001 which extended the law to cover the use as well the supply and production of drugs, but it has remained "unactivated" pending guidance on its interpretation by the Home Office.
The guidance acknowledges that charity workers are "motivated by harm reduction factors" in, for example, allowing drug users to continue to use drugs during the early stages of treatment or rough sleepers to take illegal drugs when they first enter hostels.
But it gives no protection from prosecution, leaving sector care workers, who provide acute services, entirely subject to the discretion of their local police force.
Managers who suspect drug use on their premises are told to contact police immediately. "Failure to inform and co-operate with the police exposes individuals to prosecution," states the guidance.
Kevin Flemen, acting director of drugs advice charity Release, slammed the Home Office guidance as "utterly unacceptable".
"Either you say that these are necessary services and make them legal or you say they aren't required and make them illegal," said Flemen.
"This goes right to the heart of the Government's social exclusion strategy. To rehabilitate people, they need somewhere to live."
Flemen said that a change in law was needed to put charity workers on a safe legal footing.
"We want to see essential work delivered in a wholly legal way. You might have to go back to the legislation and that's where you hit stumbling blocks because it becomes party political,
Flemen also attacked the Home Office for breaking the terms of the Compact and issuing a five-week consultation on the guidance instead of the 12 weeks required.