The announcement followed the deaths of seven people of suspected drug overdose at a local music festival on September 16.
Truong Minh Tien, deputy director of Hanoi's Department of Culture and Sport, announced the decision at a press conference.
The tragic incident took place at the Vietnam Electronic Weekend (VEW) Festival at the West Lake Water Park in Tay Ho District.
Five died in E Hospital, a general public hospital seven kilometers away, two died at the Hanoi Heart Hospital and five others are currently comatose, said a representative from the Ministry of Health.
All the twelve people, between 18 and 29 years old, tested positive for narcotics.
Whether the victims were in the same group and which drugs were used have not been ascertained. Numerous balloons containing nitrous oxide, more commonly known as laughing gas, along with pills of unknown origin were found at the scene, Hanoi police reported.
"The incident is especially serious," an officer said.
The festival was organized by Vietnamese event planning firm A Chau, said Tien. He also affirmed that all procedures necessary to authorize the event were processed in accordance with the law.
Do Anh Tuan, president of Tay Ho District's People's Committee, said that the district had deployed local police to maintain order during the festival and carried out a "dry run" beforehand.
The West Lake Water Park was supposed to ensure security and order during the festival, said Nguyen Van Vien, deputy head of Hanoi's police department.
The department is working with relevant authorities to conduct forensic tests and identify those responsible for the incident, he added.
Deputy Prime Minister Truong Hoa Binh has ordered the People's Committee of Hanoi to submit a report on the incident by Thursday.
The VEW, dubbed the biggest electronic music event ever in Vietnam, was joined by top DJs including Ben Nicky, Yellow Claw and Headhunterz, drawing thousands of fans.
The Hanoi incident is almost unprecedented in Vietnam, although drug overdose has been a threat at music festivals around the world.