Newcastle University has welcomed news that the creation of human animal hybrid embryos is to be allowed.
It will be illegal to allow embryos to grow for more than 14 days
The university's application to produce embryos that would be 99.9% human and 0.1% animal was put on hold amid "public unease" about the research.
But after further talks, hybrid embryos will be allowed for serious disease research, though a license is required.
Professor John Burn, head of the Institute of Human Genetics, said it was a victory for common sense.
The new draft fertility bill allows the creation of human embryos that have been physically mixed with one or more animal cells. However, true animal hybrids, made by the fusion of sperm and eggs, remain outlawed.
In all cases it would be illegal to allow embryos to grow for more than 14 days or be implanted into a womb.
Scientists say their work could help find cures for devastating diseases, such as Alzheimer's.
Professor Burn said: "A well-orchestrated debate by the science community has made it clear that the government took the wrong position.
"It's a great tribute to Britain that they were willing to review their decision.
"This research is simply about using eggs as incubators for basic stem cell research, and now we can use animal eggs instead of precious human eggs."
However, opponents have questioned the ethics of using human cells in this way.
Josephine Quintavalle, of the campaign group Comment on Reproductive Ethics, disagreed, saying: "It is appalling that the government has bowed to pressure from the random collection of self-interested scientists and changed its prohibitive stance.
"This is a highly controversial and terrifying proposal, which has little justification in science and even less in ethics."
Newcastle University's license application, along with one from King's College London, will now be considered by the Human Fertilisation and Embryology Authority.