Scientists have created what is believed to be the first genetically modified (GM) human embryo.

A team from Cornell University in New York produced the GM embryo to study how early cells and diseases develop. It was destroyed after five days.

The British regulator, the Human Fertilisation and Embryology Authority (HFEA), has warned that such controversial experiments cause "large ethical and public interest issues".

News of the development comes days before MPs are to debate legislation that would allow scientists to use similar techniques in this country.

The effects of changing an embryo would be permanent. Genes added to embryos or reproductive cells, such as sperm, will affect all cells in the body and will be passed on to future generations.

The technology could potentially be used to correct genes which cause diseases such as cystic fibrosis, haemophilia and even cancer. In theory, any gene that has been identified could be added to embryos.

Ethicists warn that genetically modifying embryos could lead to the addition of genes for desirable traits such as height, intelligence and hair colour.

The Human Fertilisation and Embryology Bill, which will have its second reading this week, will make it legal to create GM embryos in Britain.

The bill will allow GM embryos to be created only for research and will ban implantation in the womb. Ethicists, however, say that the legislation could be relaxed in the future.

The HFEA has said that it is preparing for scientists to apply for licences to create GM embryos. A paper, published by the authority, states: "The bill has taken away all inhibitions on genetically altering human embryos for research. The Science and Clinical Advances Group [of the HFEA] thought there were large ethical and public interest issues and that these should be referred for debate."

The Cornell team, led by Nikica Zaninovic, used a virus to add a gene, a green fluorescent protein, to an embryo left over from in vitro fertilisation.

The research was presented at a meeting of the American Society of Reproductive Medicine last year but details have emerged only after the HFEA highlighted the work in a review of the technology.

Zaninovic pointed out that in order to be sure that the new gene had been inserted and the embryo had been genetically modified, scientists would ideally need to grow the embryo and carry out further tests.

The Cornell team did not have permission to allow the embryo to progress, however.

Scientists argue that the embryos could be used to study how diseases develop. They also say GM embryos could be more efficient in generating stem cells.

However, Dr David King, director of Human Genetics Alert, warned: "This is the first step on the road that will lead to the nightmare of designer babies and a new eugenics. The HFEA is right to say that the creation and legalisation of GM embryos raises 'large ethical and public interest issues' but neglects to mention that these have not been debated at all."

He added: "I have been speaking to MPs all week and no one knows that the government is legalising GM embryos. The public has had enough of scientists sneaking these things through and then presenting us with a fait accompli."