The Drug Foundation is urging schools to support students caught using drugs and alcohol rather than punishing them.
Drug Foundation executive director Ross Bell said programmes which supported young people and helped them face up to their actions were more effective than expelling them.
The number of students disciplined for smoking and alcohol or drug use had been dropping - something Mr Bell partly attributed to increasing numbers of schools helping students deal with their problem. However, others were letting the side down, he said.
"There are still those schools that are holding out. That have this mentality that 'we're tough, we have zero tolerance, you're going to be out of here, we're not going to tolerate that in our school'.
"And it's those schools that are taking that tough approach that aren't doing the best by those students."
Such schools were worried about their reputation, Mr Bell said.
But expelling a student was the easy option, and it was a lot harder to keep them in school on a programme which got them to face up to what they had done and to mend their ways, he said.
A panel of education and drug experts assembled in Wellington to discuss the problem agreed.
Post Primary Teachers Association advisory officer Martin Henry said expelling or suspending students did not stop them abusing drugs or alcohol.
"The punishment approach doesn't work," he said.
"Students end up getting forced out of school and into dead-end options, and it's not productive for society or for the students."
Supporting students was more effective, Mr Henry said.
"If they stay in school, behaviour generally improves. And we know over the last few years there is evidence that behaviour is improving across the system, there's less stand-down and suspensions and there are more student-centred ways of dealing with situations."
Tawa College principal Murray Lucas said his school used a restorative approach to student drug-use and it mostly worked.
"It's very effective, because I actually believe at the heart of all drug and alcohol issues are relationship breakdowns and all of that sort of thing, and if we can establish respectful relationships and if we can establish the fact that we care about the student, and we want them to address their issue, I think it's more chance of success than being punitive from the outset."
Mr Lucas said his school would drug-test students to make sure they were on the right track, and it would consider suspension or expulsion in cases where students were dealing drugs.
Ben Birks Ang, leads youth drug and alcohol programmes for Auckland's Odyssey House, said the schools with the fewest drug and alcohol problems concentrated on creating a positive environment.
"The most effective approach that I've come across is where the whole school can get in behind and partner up with local agencies from the community to support the young people that need support," he said.
"It means that the school can focus on creating a positive environment where students want to be, where there are positive relationships with teachers and get on with the business of learning."
The most chronic alcohol and drug abusers were usually not detected in schools with a punishment approach, and it was better to ensure those students knew they could get help, Mr Birks Ang said.