The [British] government has announced a U-turn on its ban on the creation of human-animal embryos and has now proposed allowing them to be used to develop new treatments for incurable diseases such as Parkinson's and Alzheimer's disease.

The proposal in a new draft fertility bill published today would allow scientists to create three different types of hybrid embryos.

Scientists would be allowed to grow the embryos in a lab for no more than two weeks, and it would be illegal to implant them in a human.

The first kind of hybrid allowed under the bill, known as a chimeric embryo, is made by injecting cells from an animal into a human embryo. The second, known as a human transgenic embryo, involves injecting animal DNA into a human embryo.

The third, known as a cytoplasmic hybrid, is created by transferring the nuclei of human cells, such as skin cells, into animal eggs from which almost all the genetic material has been removed.

This is this type of human-animal embryo that is being developed in British universities. Scientists say that developing these embryos will provide a plentiful source of stem cells - immature cells that can develop into many different types of tissues - for use in medical research.

The move is a reversal of previous proposals to outlaw all types of human-animal embryos set out by ministers in a white paper published last December.

But the proposed law will not allow the creation of so called "true hybrid" embryos, which would involve fertilising a human egg with animal sperm or vice versa.

The government was criticised by the Commons science and technology committee for proposing an outright ban following objections by pro-life groups opposed to any research on embryos.

The draft bill, which also covers fertility treatment, will overhaul the Human Fertilisation and Embryology Act 1990.

British scientists have already applied to the Human Fertilisation and Embryology Authority, which regulates embryo research, for a licence to use human-animal embryos for medical research.

Professor John Burn, head of the human genetics institute at Newcastle University, welcomed the government's U-turn.

"I'm delighted that common sense has prevailed. I fully understand the knee-jerk reaction that creating human-animal embryos is worrying," he said.

"But what we're talking about here are cells on a dish not a foetus. We're talking about something that looks like sago under the microscope. And it's illegal to ever turn these cells into a living being."

A team led by Dr Lyle Armstrong at Newcastle University's stem cell institute has applied to the HFEA to use cow eggs to develop stem cells for the treatment of diabetes and spinal paralysis.

Another team led by Professor Stephen Minger, director of the stem cell biology laboratory at King's College London, wants to use human-bovine embryos to study degenerative neurological diseases such as Parkinson's and Alzheimer's disease.