After a long public consultation, the HFEA has said that after examining all the evidence it could find no fundamental reason for it to prevent cytoplasmic hybrid research. However, due to the contentious nature of the research, tight regulation would be needed.
"This is not a total green light for cytoplasmic hybrid research, but recognition that this area of research can, with caution and careful scrutiny, be permitted," said the HFEA in a statement.
"Individual research teams should be able to undertake research projects involving the creation of cytoplasmic hybrid embryos if they can demonstrate, to the satisfaction of an HFEA licence committee, that their planned research project is both necessary and desirable… [as well as being] likely to lead to scientific or medical advancements."
The consultation was called after Dr Stephen Minger, Kings College London and Dr Lyle Armstrong, Newcastle University, applied to the HFEA for licenses to carry out research that involved cloning human genetic material inside the shell of rabbit or cow egg.
The news is especially positive in light of the UK government's efforts to ban the research when the applications were first submitted and Dr Minger highlighted the importance that the whole consultation process had had in reversing the government's position.
This research would make use of a technique known as somatic cell nuclear transfer (SCNT), which is currently legal in the UK and the USA if human eggs are used.
The resulting clones, which would be 99.5 per cent human and could be used as a source of embryonic stem cells, as well as models on which to study new therapies for devastating neurological disorders such as Alzheimer's and motor neuron disease.
"The HFEA has said that this area of research and this technique of creating hybrid embryos is permitted under the act and therefore license applications can be submitted and evaluated and approved - assuming the research is necessary and desirable," said Dr Minger in an interview.
Dr Minger's group will have to wait until November to see if their application to create such embryos will be successful, however he applauded the decision saying: "I think it's a really good day for British science."
He continued by saying that this decision puts the UK in a very competitive position as it is the only Western country to allow this research so far. Chinese researchers have already conducted such experiments.
The real need for such research is the shortage of human embryos left over from fertility treatments, from which stem cells can be generated.
"This technique removes the need to ask women to donate eggs for nuclear transfer and I think that what Lyle [Armstrong] and I are proposing is a very pragmatic way around this problem," said Dr Minger.
"What we are trying to do is create cloned embryonic stem cell lines from people with genetic forms of disease where we couldn't create those cell lines in any other way."
While he believes that creating 'personal' stem cell lines to treat individual patients would be inefficient, the technique could allow the creation of huge banks of therapeutic stem cell lines that represented the genetic diversity of the population.
He continued by saying that it was perhaps more probable (at least in the short-term) that the technique would be used to create banks of cells that had very useful features for drug screening applications.
By creating more relevant cell lines that better represent specific disease conditions, more effective drug treatments will be able to be developed.
In addition, cell lines that better represent human populations will allow more effective preclinical research into drug toxicity issues and help to reduce the need for testing in animals as well as reducing the risk when drugs are first tested in man.
Meanwhile, public opinion is still divided with Anthony Ozimic, secretary of the Society for the Protection of Unborn Children (SUPC) saying he "deplored" the decision, claiming that: "there is no feasible medical application of such embryos."
He also claimed that: "extensive access to (purely human) embryonic stem cells over nearly 10 years has so far yielded limited information of scientific value, whereas good alternative sources of disease-specific adult stem cells already exist."
"There is [also] the question of embryos with much more ambiguous mixtures of human and animal DNA. These embryos may have some human characteristics, and some animal traits," said Ozimic.
Dr Minger countered some of these arguments by saying that human and animal cells have been mixed for sometime and emphasised that there are people walking around London with heart valves that have come from pigs.
"The slippery slope argument has been used quite a bit [as a reason not to allow this research] but the regulatory process in the UK prevents that from happening - if you operate outside of the HFEA you go to prison."
The HFEA said that people who do not fundamentally oppose embryo research are prepared to accept that human animal hybrid research may have some value.
However they highlighted the fact that: "there is a clear demand from people to know more about what researchers are doing and their plans for future work, highlighting a need for better communication about science and research from both the scientific community and ourselves as regulator. In the coming months we will be looking to see how this can be delivered."