Japanese scientists are expecting to be granted approval to grow human organs in animals and then harvest them for transplant within the next year.
A panel of scientists and legal experts appointed by the Government has drawn up a recommendation that will form the basis of new guidelines for Japan's world-leading embryonic research.
There is widespread support there for research that has raised red flags in other countries.
Scientists plan to introduce a human stem cell into the embryo of an animal - most likely a pig - to create what is termed a "chimeric embryo" that can be implanted into an animal's womb.
That will then grow into a perfect human organ, a kidney or even a heart, as the host animal matures.
When the adult creature is slaughtered, the organ will then be harvested and transplanted into a human with a malfunctioning organ.
"This recommendation is a very important step forward and one that has taken us three years to achieve," Professor Hiromitsu Nakauchi, head of the centre for stem cell biology and regenerative medicine at the University of Tokyo, told the Daily Telegraph.
Nakauchi's team have already succeeded in injecting stem cells from rats into the embryos of mice that had been genetically altered.
"We can apply the same principles to human stem cells and pigs, although the guidelines have not permitted us to do this yet," he said.
At present, the Japanese guidelines permit scientists to develop chimeric embryos in laboratory conditions for a maximum of 14 days, but the next stage in the process - the embryos being implanted into an animal's womb - is prohibited.