Mr Key said the Government still supported provisions allowing limited animal testing for medicines that could be used to save human lives. But he did not believe it was appropriate for recreational drugs.
He conceded it would make it harder for makers of the drugs to prove the products' safety.
"It is likely to restrict substantially the set of products that could actually be passed under the new regime. But my personal view is that if none of these products re-emerge, that's no bad thing."
He said he would never support the legalisation or decriminalisation of drugs. "The pretty clear message I want to send New Zealanders is that I don't think they should be taking recreational drugs."
The change of heart on animal testing was welcomed by Act MP John Banks, who has advocated for a complete ban on animal testing for recreational drugs with the memorable line that "rats have feelings too".
Animal rescue and welfare group Huha was also delighted at the news after campaigning strongly on the issue. Labour's spokesman Trevor Mallard said he was pleased the Government had come to its senses after it voted against a Greens' amendment to the original 2013 legislation to prevent animal testing.
Mr Mallard started a petition at the weekend, which had collected about 45,000 signatures.
The law change will be done under urgency as an amendment to the Psychoactive Substances Act, which passed last year to require makers to prove their products were safe. About 36 products have interim approval to stay on the market while that process is under way.
Mr Key said there was advice that the products allowed to remain on sale while the new safety regulations were put in place were low risk. "We get lots of advice from officials. In the end, I think that was a mistake. We should have just said 'no, we're going to get them all off the shelves'."
It was now clear testing had to be better developed so the long-term effects of the products were known.
Those 36 products would be removed from the shelves within a fortnight and no psychoactive substances would be permitted to be sold until they had gone through a new approval process.
Safe testing
Manufacturers will not be allowed to use any animal testing on synthetic drugs to get them back on sale.
*Prime Minister John Key originally said animal testing on rats would still be allowed for that process.
*This followed advice from officials that a conclusive finding on safety required products to be tested on two different species such as a rodent and a dog or rabbit.
*The Government still supported provisions allowing limited animal testing for medicines that could be used to save human lives.
