© Associated PressGround-breaking: Scientists want to create blood from embryonic stem cells
The results of the ground-breaking project could provide an unlimited supply of blood for emergency transfusions free of the risk of infection.
Researchers said because stem cells multiply indefinitely, it means it would be possible to produce as much blood as was needed.
The cells can be made from universal donor embryos - the O-negative type - and can be guaranteed to be free of infections because they have never been inside a human.
The three-year project will be led by the Scottish National Blood Transfusion Service (SNBTS) and includes NHS Blood and Transplant and the Wellcome Trust, the world's biggest medical research charity.
SNBTS director Professor Marc Turner has been involved in studies investigating how to ensure donated blood is free of the infectious agent behind variant CJD, the human form of 'mad cow' disease, the report said.
Several vCJD patients are thought to have contracted the disease by blood transfusions.
Prof Turner, of Edinburgh University, was unavailable for comment.
A spokeswoman for the National Blood Service for England and North Wales told the Independent that negotiations on the joint research project were at an advanced stage and that legal, rather than scientific, issues were holding up the announcement.
A spokesman for the Wellcome Trust added that complicated legal issues were still being ironed out between all the parties involved but that an announcement was likely to be made in the coming week.
Researchers will test human embryos left over from IVF treatment to find those that are genetically programmed to develop into the 'O-negative' blood group, which is the universal donor group whose blood can be transfused into anyone without fear of tissue rejection, the report said.
The relatively rare blood group - it is applicable to about 7% of the population - could then be produced in unlimited quantities from embryonic stem cells because of their ability to multiply indefinitely in the laboratory.
The idea of destroying embryos to create stem cells raises ethical issues, but in theory, just one embryo could meet the nation's needs.
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