Compositions containing site 1 sodium channel blockers for use as local anesthetics with rapid nerve block, improved potency and efficacy, and no local toxicity have been developed. Liposomes were employed for increased loading of the site 1 sodium channel blocker, producing prolonged duration of block without systemic toxicity. In one embodiment, the compositions contain a site 1 sodium channel blocker alone. In another embodiment, the compositions contain a site 1 sodium channel blocker in combination with a corticosteroid. As demonstrated by the examples, encapsulating site 1 sodium channel blockers in liposomes results in rapid and prolonged nerve block without systemic toxicity, which is enhanced by the addition of a corticosteroid. Fluid liposomes showed more rapid release of STX than did solid ones, and dexamethasone accelerated STX release.