Xanax is a benzodiazepine, a similar drug to valium but stronger and much faster acting.
It is not licensed for use in the UK, though it is more widely used in the United States.
The drugs circulating in the UK have either been imported illegally or are counterfeits, East Riding of Yorkshire's Public Health team has warned.
It said Xanax has received publicity in the US for its link to a number of rap artists, including Lil Peep and Mac Miller - both of whom have died of overdoses - and Lil Xan, who is known to use the drug.
The council's substance misuse manager, Tony Margetts, said: “We have been receiving increasing reports that this drug is being used in the East Riding at the moment.
“The reports include instances where this drug has been taken by children and young people and this follows national evidence for an increase in use by young people."
He said the effects of Xanax are sedating and disassociating, giving a mildly hallucinogenic effect.
Users can experience less welcome side effects such as confusion, memory loss, loss of inhibition and poor decision-making.
“The greatest concern is that Xanax is fast acting, which increases the risk of overdose and is also more dangerous if taken with alcohol, a particular concern with the Christmas party season upon us," Mr Margetts said.
“As with other drugs in the benzodiazepine class there is the risk of developing dependency if they are used regularly.
“There is also a concern that some tablets sold as Xanax are counterfeits and may contain other drugs, possibly other types of benzodiazepines and synthetic cannabinoids.
“Our advice is not to take these or any drugs. Xanax is dangerous and anyone considering using it should be aware that if they are using Xanax, or something they think is Xanax, mixing it with alcohol or other drugs can be very harmful and can impair their judgement.”
Supplying these Class C drugs is illegal and anyone who suspects people of dealing these drugs should consider reporting it to the police, Mr Margetts stressed.
The council is urging parents to be aware of the dangers associated with using Xanax and anyone who suspects their children of using the drug can find help on the websites below or by calling the number provided.
Where to get information and advice
If you live in the East Riding and need help with the topic of drugs, contact the East Riding Partnership on 01482 336675.
Information on Xanax can also be found on the Talk to Frank website.