Scientists have been given the go ahead to conduct research on clones of human embryos by a House of Lords committee.

The Lords select committee on stem cell research concluded that the Human Fertilisation and Embryology Authority (HFEA) should be allowed to issue research licences.

The HFEA is now expected to begin granting licences for the research, under strictly controlled conditions.

The committee was set up to investigate issues arising from the government's Human Fertilisation (Research Purposes) Regulations 2001, which extended the purposes for which research on human embryos could be undertaken to allow for research into the treatment of serious diseases.

"After looking at all the issues very carefully, the committee was not persuaded that it would be right to prohibit all research on early embryos, which has been permitted since 1990 and regulated effectively by the Human Fertilisation and Embryology Authority since then." said Rt Rev Richard Harries, the Bishop of Oxford and chairman of the committee.

The committee looked at three main objections to the research - that it was unnecessary, unethical and was a step towards human cloning.

"There is a clear scientific case for continued research on ES [embryo] cells, in order that the full potential of adult stem cells for therapy can be realised and because it is likely that some therapies will need to use ES cells," said the report.

Addressing the ethical concerns, the committee concluded that while embryos should not be created specifically for research purposes, it is "not persuaded" that there are ethical grounds for banning the research.

To address concerns on human cloning, the committee called for tight regulation to prevent the production of a cloned baby.

The committee "unreservedly endorses" the legislative prohibition on cell nuclear replacement (CNR), which involves the replacement of the nucleus of an egg with the nucleus of a cell from another individual to produce a clone of the donor, and called on the government to support any moves to negotiate an international ban.

"However, we do not believe that the risk of reproductive cloning is such as to justify prohibiting the use of CNR for research. The HFEA has an excellent record in ensuring that IVF clinics comply with the law, and the committee is satisfied that its regulatory powers, now reinforced by a specific statutory prohibition, provide sufficient protection against the development of CNR leading to reproductive cloning in the United Kingdom," the peers concluded.

Pro-life campaigners criticised the report's conclusions, but medical researchers said it opened the door to new areas of scientific research.

The Medical Research Council said this area of research has "real potential" for the treatment of many life-threatening diseases and conditions.

Professor Sir George Radda, chief executive of the MRA, added: "We are pleased that the Lords have recommended the establishment of a stem cell bank as a matter of urgency. Such a bank will allow researchers to explore this enormous potential in a controlled environment."

Dr Evan Harris MP, the Liberal Democrat health spokesman, also welcomed the report.

"Recent developments demonstrate a need for further legislation. The government needs to ensure that it provides a modern legislative framework to maintain Britain's leading position in the responsible regulation of these highly sensitive issues," he said.