Britain's effort to lead the world in stem cell research with the creation of human-animal "hybrid" clones has ground to a halt through lack of funding less than a year after the controversial technique was legalised.

Funding bodies are refusing to finance the research and existing projects have been run down to the point at which they may end completely within weeks.

One of the researchers involved in the work said last night that the grant applications may have been blocked by scientists on the funding committees who are morally opposed to the creation of cloned hybrid embryos derived from mixing human cells with the eggs of cows, pigs or rabbits.

The decision threatens Britain's leading position in the world in terms of creating of stem cells from animal-human hybrid embryos, research which in the US is banned from receiving federal government funding.

Hybrid embryos – created by fusing human cells with animal eggs – could eventually allow doctors to create embryonic stem cells from a patient's skin. This would the allow the development of personalised "body repair kits" – where scientists could design individual treatments for heart disease, Parkinson's and diabetes.

However, two out of the three licence holders legally permitted to create hybrid embryos from human cells and animal eggs have been denied research funds needed to continue the work, The Independent has learnt. When animal-human hybrid embryos were debated in Parliament last year, some of Britain's most eminent scientists and funding bodies warned it would be a travesty if this research was banned. Yet less than a year later, lack of funding has made the termination of the research increasingly likely.

The Medical Research Council and the Biotechnology and Biological Sciences Research Council do not comment on individual funding applications. The stem cell scientists have not been told why they have been denied funding other than that their research has to compete with other projects.

However, at least one researcher suspects there could be other reasons why people on the funding committees of research councils may not be happy to see the creation of the cloned hybrid embryos. "People reviewing grants may be looking at this from a completely different moral perspective and how much that has influenced people's perception about whether this should be funded, we don't know," said Professor Stephen Minger of King's College London. Professor Minger is one of three licence holders in the UK allowed to create animal-human hybrid embryos for the creation of stem cells but his work has not started a year after his licence was issued by the Human Fertilisation and Embryology Authority.

"The problem has been a lack of funding. We haven't been able to buy equipment, £80,000 to £90,000-worth," Professor Minger said. "We put in a grant proposal last year but it wasn't successful and we're dead in the water. We're discussing whether it is worth the time to re-submit our application."

Another licence holder is Lyle Armstrong of Newcastle University's Centre for Life who has so far managed to create 278 hybrid embryos from human cells and cow eggs but has been denied funding that could help him retrieve embryonic stem cells.

Dr Armstrong said: "It seems a lot of effort for nothing. We are investigating other avenues to keep this work going but it is depressing that Britain seems happy to create a nice regulatory environment for this work but then not to provide money for it," he said.

The third licence holder, Professor Justin St John of Warwick University, said his proposal for human-animal hybrid clones has still to begin as he is preparing a grant proposal.

Last May, leading scientists applauded Parliament for passing the Human Fertilisation and Embryology Bill, supported by both Gordon Brown and David Cameron, that allowed the creation of animal-human "admixed" embryos for stem cell research. "The ability for scientists to use human admixed embryos will help keep the UK at the forefront of efforts to harness the potential of stem cell research for the benefit of human health," said Sir Leszek Borysiewicz, the chief executive of the Medical Research Council, which turned down Professor Minger's grant application.

The revelation that the research has been frozen by lack of funding has astonished some observers. Fiona Fox, head of the Science Media Centre in London, who co-ordinated a successful campaign to support the Bill, said: "I find it remarkable given the unprecedented level of support for this research across the scientific community."

Hybrid embryos: How and why

*Three teams have licences to create human-animal hybrid embryos by fusing human cells with eggs of cows, rabbits or pigs that have had their cell nucleus removed to lose 99.99 per cent of the animal's genetic material.

*The aim was to create embryos that would be genetic clones of the person who donated the skin cells. Embryonic stem cells are capable of developing into any body cells. The hope was to generate cells that could repair damaged organs within the body without fear of tissue rejection.

Belfast Telegraph