Co-proxamol, used by thousands for conditions such as back pain, will be phased out over the next year or two.
People do not need to come off the drug yet, and should discuss their treatment with their GP, said the Medicines and Healthcare products Regulatory Agency.
Charities criticised the move saying it left many patients with very few options of effective pain relief.
The MHRA is sending letters to GPs informing them of the decision.
Data shows fatal overdoses due to co-proxamol are the second most frequent means of suicide with prescribed drugs in England and Wales, accounting for up to 400 deaths each year.
The risk of death associated with co-proxamol overdose seems to be higher than for either tricyclic antidepressants or paracetamol.
The drug is a combination analgesic containing paracetamol and the opioid dextropropoxyphene and is available only with a prescription.
But some say co-proxamol is no better than full strength paracetamol at relieving pain and is known to be very toxic in overdose.
For this reason, the Committee on Safety of Medicines, an independent expert body that advises the government on medicines, was asked to look at the risks and benefits of co-proxamol.
Measures have already been taken to address concerns about the medicine, including making advice more prominent on the packaging.
But they have failed to reduce the number of fatalities, according to experts.
Chairman of the CSM Professor Gordon Duff said: “Co-proxamol will be phased out of the market place gradually to give patients time to discuss their treatment with their doctor and change to a suitable alternative.
“There is no need for panic or concern and if patients have been taking co-proxamol continuously for a long time they should not stop without consulting their doctor.”
Neil Betteridge, of Arthritis Care, said the move was bad news for people with arthritis, particularly given the recent safety concerns about other painkillers such as COX-2 inhibitors.
“The withdrawal of co-proxamol leaves many people with very few options for the safe and effective management of their pain.
“Although we understand the MHRA’s concern, we are of the view that a stringent package of prescribing advice, packaging changes and other warnings should limit the risks of co-proxamol being misused,” he said.
A spokeswoman from the Arthritis Research Campaign said: “Co-proxamol is a very effective and much safer than some of the other painkillers.
“It’s incredibly bad news.”
It is estimated that 1.7 million GP patients per year receive 7.5 million prescriptions for co-proxamol.