Walking beside me through a market town centre is a lean, healthy, 46-year-old man. “So, you wanted me to show you how I used to look?” He draws in his stomach, rounds his shoulders, paws imaginary sweat from his cheeks, and suddenly I’m looking at a junkie – jumpy, wheedling, begging for a fix. “And this is how you walk when you’re going to score heroin.” Subtly hunched over a sunken midriff, he strides ahead, as fast as he can without breaking into a run. “It’s all in the stomach,” he grins when I’ve caught up. “It’s all about stomach cramps.”

For 14 years, Neil Woods would leave behind his wife and two young children, put on stained “charity-shop scally tracksuit bottoms”, and turn up in a town somewhere in England as a drug addict. “I was a sponge for colloquialisms and mannerisms. Street slang is very regionalised, even just specific to a town, so you have to adapt quite quickly. The biggest danger at the start of any job is that you’ve landed from Mars – and who are you?” Using a new cover story each time, the undercover drugs squad officer would gradually befriend destitute addicts, ingratiate himself with their dealers, buy drugs from them – and then have the whole lot sent to jail.

It’s a struggle to reconcile the faux junkie Woods used to be with the articulate ex-policeman taking me for tea and cakes. “Oh, but I loved the art of deception,” he offers. “And I loved the development of the skill. It’s a great thrill to be able to successfully deceive people. Particularly when it’s dangerous.” The dangers grew every year, as dealers cottoned on to undercover police tactics, and grew increasingly suspicious of a new face asking for drugs. One dealer tried to run Woods over, another held a knife to his groin, another pulled a 9mm Glock handgun on him. But the commendation awards kept piling up. Woods even helped formulate national guidelines for undercover operations, and trained officers all over the country in his skills. By his calculation, he consigned drug offenders to more than 1,000 years behind bars.

He did feel guilty about jailing the hapless addicts who led him to the dealers. “But I told myself I was fighting the good fight, and that the ends justified the means.” This moral justification seemed more compelling with each new assignment, due to the ever-escalating violence deployed by dealers to deter communities from talking to the police. In Northampton, Woods discovered a chilling new punishment for informants – gang rape of a girlfriend or sister – and every heroin addict in Brighton warned him that if the local dealers thought he had talked, the next hit of heroin he bought would kill him. Woods had wondered why heroin fatalities in Brighton were five times the national average. This wasn’t an overdose epidemic, he realised, but dealers literally getting away with murder, making their victims’ deaths look like just another accidental overdose.

It was then that the epiphany dawned. “Every year the police get better at catching drug gangs, and the gangsters’ most effective way of fighting back is upping the use of fear and intimidation against potential informants. The most efficient way to stop people grassing them up is to be terrifying. In other words, organised crime groups were getting nastier and nastier as a direct result of what I was doing.”

The only dealers the drug squad could reliably catch, he saw, were “low-hanging fruit” – the small-fry dealers, and harmless addicts trying to pay for their habit by selling a bit, who an informant could report with no fear of retribution. “It’s why organised crime is increasingly becoming monopolised, because the most successful organised crime groups are the ones that can be the most terrifying.” Like cold-war nations seeking security in Nato or the Warsaw Pact, small-town dealers are being absorbed into large city gangs. “It’s a classic arms race. Although at least with the cold war you could knock a wall down, and de-escalate it. There’s no wall to knock down with the war on drugs, is there? Brighton is the thin edge of the same wedge destroying Mexico. Mexico’s just the thicker end of it, but it can only go in one direction.”

He also saw what the drug war was doing to the police. When Woods came across corrupt colleagues in the drug squad, the senior ranks would shrug that this was inevitable, given the money involved. A criminal trade that is worth £7bn could buy as many police as it liked.

“But the public don’t tend to see this, and it’s not really very much talked about, is it? One of the big problems is the duty of chief constables to maintain public confidence – which is understandable, because if the public lose confidence in the police, anarchy can follow. But it means there is no openness about the extent of corruption from the drug supply. So the public don’t know. Compare that with prohibition in America up until 1933. The headlines in the press were constantly about the corruption that was being caused by prohibition.”

The realisation that the career he had risked his life for was not merely futile, but the chief cause of the misery he had witnessed, plunged Woods into a psychological crisis. He felt as if he was losing his mind until doctors diagnosed PTSD; it was so severe that even today Woods is twitchy and restless. A tic jerks his neck into spasms when he explains that the memories tormenting him were of the harm he had done to vulnerable addicts. This form of PTSD, he learned, is called Moral Damage. “It’s about having done bad things. And I have done really bad things.”

He tried to talking to colleagues, but they were having none of it. If drugs were legalised, they assured him, the dealers and gangsters wouldn’t disappear, but simply diversify into other crimes.

“This is the greatest misunderstanding about crime. It’s not criminals that cause crime, it’s opportunity.” No other crime presents the same opportunity for “any 15-year-old” to make anything like as much money as easily and with so little risk of being caught. “And it’s all about the demand as well. The government’s own statistics say three million people in this country use cannabis. There is no such vast demand for any other type of criminality.”

Increasingly animated, he goes on: “Fifty per cent of the people behind bars in this country are there for drug-related reasons. Alongside that, 50% of acquisitive crime is committed by less than 0.2% of the population. And that’s problematic heroin users. If we undercut the criminal gangs, and prescribed heroin to addicts, most of that crime would disappear overnight. The evidence is there in Switzerland. Switzerland doesn’t go far enough, but even from their limited evidence, the crime drops that they have had are absolutely astonishing.”

But drugs, his colleagues persisted, kill people. Only recently, teenagers in Manchester have been left in comas after taking ecstasy. “That’s the reason to regulate!” he exclaims. “We don’t have 70% rum any more, because it used to kill people, so we regulated. There’s a limit on how strong spirits can be. We should do the same for other drugs, because otherwise when children do get hold of these things, there’s no regulated amount.”

The argument Woods heard more than any other from his colleagues was: yes, the war on drugs is hard to win, but just because lots of people burgle houses that’s no reason to legalise burglary, so we shouldn’t legalise drugs just because so many people take them. By now it’s hard to remember that Woods was ever a policeman. He tucks into “this bog-standard reply” as if it were a banquet. “There’s two answers to counter that view. For one, burglars are a tiny number of people. As any police inspector or sergeant will tell you, you can decrease the amount of burglaries in a town of 25,000 people by half by catching two burglars. And by catching burglars, you reduce the demand for that crime, so to speak. But by policing drugs, you don’t reduce the demand. You have no impact on the demand whatsoever.”

He cites a global study, conducted by the coalition government, of the impact that punitive drug policies have had on drug use. Its unambiguous conclusion, he says, was that “however harsh your measures – the death penalty, 20 years in prison – they have no impact on drug use”. Instead of wasting our time trying to reduce drug use, argues Woods, “drug policy should be about reducing not drug use, but drug harm”.

The second point, he continues, “is that a burglary causes all sorts of devastation, so is wrong in itself. But the only reason why drugs are prohibited is because we made a decision.” The impulse to temporarily alter one’s mind is both natural and universal, and unless we think inebriation intrinsically immoral – in which case alcohol has to go, and probably coffee, too – to allow one method while banning another “makes no sense at all”.

Following residential treatment for PTSD, Woods never returned to work. In 2011, he quit the police, and last year became the UK chair of Law Enforcement Against Prohibition, an international organisation of serving and former police, prison, military and intelligence officers who want the public to know about the unconscionable damage they have seen the war on drugs do. Founded in the US, Leap hopes to emulate the success of Vietnam Veterans Against the War. “I’ve caused enormous harm and I think I’m duty bound to try and put things right. I’m also duty bound because I’m in a unique position. With my experience and views, I have the opportunity to tell people, and there’s only me that has my experience. I need to tell people. And people listen to me, because I’m not a hippy. I was a police officer.”

Former friends in the force were immediately ordered to sever all contact with Woods, and although Leap receives Facebook friend requests and messages of support from serving officers “all the time”, he accepts that, to his seniors, he is a traitor. To make matters worse, he has now written a memoir about his undercover career. Good Cop, Bad War is a gripping exposé of the disastrous reality of the drug war, which he hopes will help shift public opinion. “I didn’t really want to write a memoir. I’m an extreme introvert. But it’s the best vehicle to get people to come with me on my journey, and realise what it was that made me come to the conclusions I did.”

Woods offers an analogy with the dramatic transformation in attitudes to homosexuality. “There was no particular revolution. Society just collectively thought: OK then, some people are gay. And then the laws changed. Well, things are changing rapidly with attitudes to drugs now. This has become a mainstream issue.” Canada is about to introduce a regulated market, and once the British public sees it work there, he anticipates a sea change in our attitude.

The drug policy Woods wants is both simple and radical. Heroin should be prescribed by doctors to addicts, and every other drug sold under strictly regulated conditions. Even crack? “I went into the police believing that message, ‘One smoke of crack and you’re addicted for life.’ I remember seeing Nancy Reagan on TV saying that, and it’s literally a load of crap. There is no evidential basis in that statement at all.” Contrary to drug war propaganda, he says, only a small minority of drug users ever develop a problem, regardless of which substance they take. Across the board, the figure is roughly 10% – the same percentage of gamblers who become problematic, interestingly – the only exception being heroin, where it is 25%.

Woods lobbies enough politicians to know that they won’t make new laws until they can see the public want them. He won’t say how long that will take – “Who knows?” – but he is sure of one thing: we will look back on the drug war one day, “and marvel at how we could ever have believed in it”.

• Good Cop, Bad War by Neil Woods with JS Rafaeli is published by Ebury. To order for £12.29 (RRP £14.99) go to bookshop.theguardian.com or call 0330 333 6846. Free UK p&p over £10, online orders only. Phone orders min p&p of £1.99.