A survey of 30 local education authorities by the Office for Standards in Education found the number of schools with a policy covering drugs education had increased significantly since 1998.
Three-quarters of primaries and nearly all secondaries in the survey had clearly stated objectives for lessons on the issue.
But OFSTED is concerned about the absence of guidelines in the majority of primary schools about what to do when in the event of drug-related incidents. Although such a policy is not required by law, the Government has made it clear that all schools should develop one.
A recent survey of nearly 1,000 children found that one in 10 11-year-olds had taken illegal drugs. The number of younger children drinking alcohol on a regular basis has also increased.
Chris Davis, spokesman for the National Primary Headteachers Association, said:
"Hopefully the lack of policy is about drugs notrearing their heads in primary schools. But it is better to be wise before the event not after it.
"One of the problems is the sheer number of policies that schools are now expected to write."
The report said that in the majority of lessons which tackled the issue of drugs, pupils achieved adequate levels of knowledge and understanding.
But while the police were making a direct contribution to drugs lessons in 39 per cent of primaries and 64 per cent of secondaries, a number of schools said police support was declining. Only one primary in six and one secondary in three involved pupils in forming and reviewing drug policies.
The report also said that one in six policies was more than two years old and in need of review.
An inquiry was launched earlier this year at a primary school in Hamilton, South Lanarkshire, after an 11-year-old allegedly showed a block of cannabis to classmates. The incident coincided with the launch of an anti-drugs campaign in Scotland aimed at nine to 11-year-olds.