Stilnox was prohibited by the Australian Olympic Committee but is not considered performance-enhancing and is not banned by the Olympics, the BBC reported Friday from Canberra.
"We stand here collectively to confirm that we did take part in a bonding exercise during which members of the [4x100 freestyle] relay team took Stilnox," the swimmers said in a statement. "We acknowledge by our recent action in continuing a recent tradition in the Australia swim team we have let ourselves down and the people who have supported us."
The athletes also said they engaged in "childish" and "stupid" pranks, such as making prank phone calls and knocking on other athletes' doors.
The admission came after a report submitted to Swimming Australia blamed a "toxic" team culture with bullying and prescription drug abuse for the Australian swimming team's poor performance in the 2012 Games. The country won only one gold medal for swimming events.
Swimming Australia said the swimmers will face an inquiry panel.
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