Popping a party pill like MDMA could one day be prescribed as part of an effective mental health treatment plan.

CSIRO researchers in Australia and international scientists are studying psychedelics, such as MDMA or psilocybin (derived from certain species of mushrooms), to see if they can help people suffering from depression, anxiety, addiction and post-traumatic stress disorder.

It is estimated that one in five people in Australia suffer a mental illness each year, with some research suggesting that more than a third of sufferers may not respond to existing treatments.

Iinitial clinical trials with psychedelics by CSIRO scientist Peter Duggan have been promising.

"Clinical trials both here and internationally have been using known psychedelics ... with impressive results, but there's still much to be learnt about how these drugs work," he said.

Adjunct Professor Duggan said the drugs have the ability to alter the chemical composition of patients' brains, much like antidepressants, creating a more positive psychological outlook.

"There are many psychedelics known, both natural and synthetic, and CSIRO can now work with local biomedical companies to extract, synthesise, improve and then develop manufacturing processes for up to 15 different psychedelic compounds," he said.

"By working with local industry to improve drug design and the patient experience, CSIRO can push Australia into a leadership position in the development of these potentially life-changing medications," he said.

Under the new licence, companies such as Melbourne-based Natural MedTech will explore the psychoactive properties of plants and fungi for medical use.

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