24-year-old Amy was spotted inhaling neat vodka while out partying with Kelly Osbourne, Kimberley Stewart, Miquita Oliver and Mark Ronson.
Winehouse, who has fought drink and drug addiction since finding fame, was reportedly spotted at club Bungalow 8 playing the "Gas Chamber" drinking game.
"Amy was the life and soul - but even we were shocked by this party trick," a source said.
"She was sat next to Kelly and Miquita when she covered one nostril, tilted her head back and sucked the vodka shot down her open nostril through a straw.
"She threw back her head and reeled in shock and everyone around her looked stunned."
Last year Prince Harry was photographed inhaling the spirit while on holiday in Namibia with girlfriend Chelsy Davy.
Doctors have warned that the practice is dangerous as the alcohol bypasses the liver and is absorbed directly into the lungs, increasing the risk of brain damage.