LSD and other psychedelics have long been illegal in the US, but studies suggesting they may be effective in medical treatments have helped shift perceptions.

This year Denver was the first US city to decriminalise magic mushrooms after research suggested some compounds aid treating depression and anxiety in cancer patients.

Psilocybin is a Tier 1 illegal drug in the US and has not yet been approved as a medical treatment. However researchers hope the new centre may contribute to a sea change.

The new funding is the largest ever single donation to the field and will fund a five-year research programme to examine whether psilocybin, the psychedelic compound found in magic mushrooms, can treat alcoholism, post-traumatic stress disorder and several other complex conditions.

Many of the tests being conducted by the centre are the first of their kind and will involve between 200 and 250 volunteers over a number of trials. In most cases patients will be given one or two doses of the drug while under constant observation.

Dr Frederick Barrett, assistant professor of psychiatry and behavioral sciences at Johns Hopkins, said psilocybin offered a "radically different model" of treatment as psychedelic drugs "don't follow the cycle of abuse".

"People don't typically experience craving or withdrawal after the use of psychedelic drugs," he said.

Dr Barrett said researchers are still unsure why psychedelic drugs work, but theories suggest their effect on the brain is to "increase cognitive flexibility", or alter its "balance of positive and negative emotional information".

However Dr Barrett cautioned against decriminalisation.

One of the donors to the new centre is Tim Ferriss, an entrepreneur and podcast host.

The other private donors are the Steven & Alexandra Cohen Foundation, which provided the bulk of the funding, as well as Matt Mullenweg, the co-founder of WordPress, TOMS shoe brand founder Blake Mycoskie and investor Craig Nerenberg.

Telegraph, London