Ministers from European Union member states have agreed to continue funding research on embryonic stem cells.
Scientists say stem cells could cure degenerative conditions
Some countries oppose the research, but scientists say the cells are the key to treating diseases such as Alzheimer's and Parkinson's.
Last week US President George W Bush used his veto for the first time to limit federal funding for the research.
The EU ministers agreed not to fund activities that destroyed human embryos but said other research could continue.
European Commissioner for Science and Research Janez Potocnik said the EU would not finance the "procurement" of embryonic stem cells - a process which results in the death of the embryo - but it would finance the "subsequent steps" to make use of the cells.
Stem cells are able to turn themselves into any other type of cell in the body, and it is hoped therefore that they can be used to repair parts of the body or develop new drugs.
The cells are removed from human embryos left over from fertility treatment and earmarked for disposal.
Five countries voted against the decision - Austria, Lithuania, Malta, Poland and Slovakia.
Germany, Italy and Slovenia were won over by the decision not to fund activities causing the destruction of embryos.
STEM CELL RESEARCH FUNDING
"We must conserve human life from its conception. We want no financial incentives to kill embryos," German Research Minister Annette Schavan had told fellow ministers earlier in the day.
Together the eight countries could have blocked adoption of the EU's 54bn euro (£37bn) research budget for 2007-13, of which stem cell research forms a very small part.
Mr Potocnik said the agreement reflected the EU's existing practice, as no researchers planning to engage in procurement of stem cells had ever sought EU funds.
"We clarified what actually we do and we committed ourselves to continue in that direction also in the future," he said.
A spokeswoman for Europabio, which represents European biotech companies, said the industry was happy with the outcome
Some of the countries which oppose stem cell research are influenced by Roman Catholic teaching.
In Germany, memories are coloured by Nazi experiments during World War II.
Belgium, Spain, Sweden and the UK are among the most enthusiastic backers in Europe of stem cell research.
In practice, most European stem cell research is funded at national, rather than European level, and uses adult rather than embryonic stem cells.
"Really nothing has changed," said Irish Enterprise Minister Micheal Martin.
Portuguese Minister Jose Mariano Gago said: "We must avoid a situation where our scientists emigrate to other countries."
The European Parliament must agree to the ministers' compromise, but Mr Potocnik said he thought it would not be a problem.