Government plans to ban the creation of human-animal hybrid embryos could potentially harm UK science, say MPs.
Early embryos yield stem cells
The science and technology select committee called for regulation of such work instead of an "unnecessary" ban.
Some researchers want to mix human and animal cells to create a source of stem cells to help fight human diseases.
The government has proposed a ban because of what it has called "public unease". Opponents say there is "global" opposition to such research.
However, as well as the report backing research, a letter from 223 medical charities and patient groups has called for the government to sanction it.
Genetic material would be taken from humans and put into a host animal egg to create hybrid embryos.
It is hoped their stem cells might help in the fight against conditions such as Alzheimer's or motor neurone disease.
After a public consultation, the government proposed an outright ban on hybrid embryos and is due to publish a draft Bill next month.
Two applications from British research teams for permission to produce embryos that would be 99.9% human and 0.1% animal have been sent to the Human Fertility and Embryology Authority (HFEA) but have been put on hold.
The MPs voiced concerns that a ban might not only encourage researchers to leave the UK in order to undertake their research in a "more permissive regulatory regime", but also "inhibit early stage researchers entering the field".
Phil Willis, chairman of the select committee, said banning the creation of hybrid embryos was unnecessarily prohibitive and the HFEA was capable of judging each application and issuing licences accordingly.
The committee said any human-animal chimera embryo should not be allowed to develop past 14 days and implantation of such embryos should be prohibited.
"This is a test of the government's commitment to science," Mr Willis said.
"Scientists, funders, the regulator and patient interest groups - even the DTI and the prime minister - have spoken out against the Department of Health's proposals."
Committee member Evan Harris said: "Ministers have never provided a rational basis for their ban and their only supporters are pro-life groups and anti-science campaigners who oppose all embryo research."
In a letter to Tony Blair, the Association of Medical Research Charities (AMRC) said there had been growing disquiet about an outright ban.
Spokeswoman Dr Sophie Petit-Zeman said: "To our knowledge, a letter to government signed by 223 medical research charities and patient organisations is unprecedented."
She said the AMRC respected the sensitivity of the issue but that it was important to balance concerns against the medical benefits that might be lost if it were outlawed.
Dr Vivienne Nathanson, head of science and ethics at the British Medical Association, said the law already prevented such embryos being placed in a woman and there was a robust mechanism for regulating individual research projects.
"The BMA does not understand the government's current reservations on this issue."
Professor Chris Shaw, neurologist at King's College London and one of the researchers who applied for a licence to create hybrid embryos, said: "The committee's recommendations show that when people really understand the work involved, and the potential benefits, that the law can be used to regulate and not restrict science in this field."
Sir Richard Gardner FRS, chairman of the Royal Society's stem cell working group, agreed a statutory ban was "unnecessary".
But Josephine Quintavalle, director of Comment on Reproductive Ethics said: "Despite the enthusiasm of this small committee, worldwide there is more opposition than support for the creation of such entities, and within the United Kingdom as well.
"The public should now demand an extensive and objective consultation at the highest democratic level, and by this we mean Parliament itself."