The Department of Health (DoH) wants to introduce new legislation that would prevent pharmacists from being prosecuted for genuine dispensing errors.
It is currently considering feedback from a consultation in which various bodies including the Care Quality Commission and General Pharmaceutical Council were asked about the proposed changes.
Voluntary reporting by pharmacists shows 10,000 medication errors a year out of a billion prescriptions issued, BBC Radio 5 live Investigates reports.
But academic research suggests that a quarter of a million patients are given the wrong medicine every year, with a million more so-called "near misses".
Seven patient deaths have been linked to high street chemists since 2009.
The DoH now wants to encourage candour by introducing a "no-fault" reporting system where blunders could be reported more freely.
A spokesman for the department said: "Encouraging pharmacists and their teams to come forward when they do make mistakes means that patients get better, safer care.
"Pharmacy professionals will learn from mistakes and prevent them from happening again. By decriminalising mistakes we will promote a more open culture of transparency."
According to support groups, increasing numbers of the 36,750 high street or community pharmacists in the UK are feeling stressed due to the pressure of ever-rising numbers of prescriptions.
Under the current Medicines' Act, pharmacists face prosecution if if they own up to making a mistake.
But the new system would mean that if they made a genuine mistake that harmed someone they would not face criminal proceedings.
The consultation document said: "Removing the threat of criminal sanction for inadvertent dispensing errors will address a significant fear among pharmacy professionals which is currently inhibiting the reporting of such errors.
"Ultimately this change should support increased reporting and learning from errors, thereby improving patient safety."
Dawn Britton, a 62-year-old from Bristol, died in 2013 after going into a hypoglycaemic coma.
She died weeks after her pharmacist wrongly dispensed diabetes drugs instead of tablets for her Crohn's disease.
Her daughter Tammy Haskins told BBC Radio 5 live Investigates there was no point changing the law as no-one had faced prosecution in her mother's case.
She said: "The CPS looked at it twice and both times they said it was not in the public's interest to prosecute. I feel angry no-one's accountable for my mother's death."
The investigation reports that lawyers are sceptical the changes would bring about significant improvements in safety.
Renu Daly, from Neil Hudgell Solicitors, represented Ms Britton's family.
She said: "These proposals will have a very limited impact on the protection of the public or on ensuring the safe supply of medication is better regulated.
"They will simply protect pharmacists from any kind of external scrutiny and accountability, and that would be a dangerous route to take."
Ash Soni, president of the Royal Pharmaceutical Society, insists the proposed law change will improve patient safety.
"Pharmacists take the responsibility for the safe and correct supply of medicines to patients extremely seriously," he said.
"Sadly, mistakes occasionally happen, and when they do we must be open with patients and do everything we can to stop them happening again.
"The proposed changes will increase accountability through greater reporting of errors and improve patient safety by sharing the learning from errors across the profession."
The DoH's UK-wide consultation ran from February 12 to May 14.
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