President Barack Obama today ended restrictions on federal funding for embryonic stem cell research, overturning a Bush administration policy that patients and medical researchers said hindered the development of new medical treatments.

"In recent years, when it comes to stem cell research, rather than furthering discovery, our government has forced what I believe is a false choice between sound science and moral values," Obama said at the White House.

"In this case, I believe the two are not inconsistent. As a person of faith, I believe we are called to care for each other and work to ease human suffering ... But in recent years, when it comes to stem cell research, rather than furthering discovery, our government called to care for each other and work to ease human suffering. I believe we have been given the capacity and will to pursue this research – and the humanity and conscience to do so responsibly."

For Harvard University scientists, Obama's repeal today of Bush's restrictions on federal funding will have dramatic practical effects.

For one, the university's stem cell institute will no longer have to buy two sets of pencils and pads – one for cutting-edge stem cell study and another for work using federal funds barred from supporting stem cell research.

"This will mean the end of the quite onerous bookkeeping and segregation of supplies, equipment and people that were necessary under the Bush executive order," said BD Colen, spokesman for the institute in Cambridge, Massachusetts. "Literally, you could not pick up a pencil off a bench if you were working with embryonic stem cells."

The institute even owns two $35,000 (£25,000) machines to produce slices of tissue – one bearing a green sticker, and one with a red sticker, which could not be used for stem cell research.

By signing an executive order repealing the nearly eight-year-old ban, Obama cheered patients, doctors and scientists who maintained that Bush had substituted ideology for science and had set back critical medical research in order to placate conservative supporters.

Stem cell research advocates say that Obama's executive order is but a first step toward enabling full federal support for the study. A federal law that Obama cannot overturn with an executive order currently prohibits federal dollars from being used to create new stem cell lines, for example.

"There's additional work," said Susan Solomon of the New York Stem Cell Foundation. "It's a great first step, and to have a president who supports this research is absolutely fantastic."

Embryonic stem cells are prized in medical research because they can develop into any kind of tissue. But the research raises profound ethical questions, because human embryos - typically conceived in vitro - are destroyed so that stem cells may be harvested. Conservatives say it creates human life only to end it.

The research is allowed in Britain, which in the years since Bush's restrictions, has become a world centre of stem cell study.

Since Bush's August 2001 ban American stem cell research has been sustained by private funds that have declined lately as the economy has hit a downturn. The fiscal stimulus bill passed by Congress last month includes $8.2bn in new tax dollars for the National Institutes of Health.

Harvard stem cell institute co-director Doug Melton will apply for federal grants to research ways to turn stem cells into heart cells, pancreatic cells to treat diabetes, and neurons that could someday yield a cure for Parkinson's and Alzheimer's diseases.

"It is a relief to know that we can now collaborate openly and freely with other scientists in our own university and elsewhere, without restrictions on what equipment, data, or ideas can be shared," Melton said in a statement. "Science thrives when there is an open and collaborative exchange, not when there are artificial barriers, silos, constructed by the government."