The European Commission has said the EU should fund research which involves harvesting stem cells from frozen human embryos - but not in countries where the technique is banned.
However those countries may still oppose the introduction of the new rules on moral grounds.
Sweden, Finland, Greece, the Netherlands and Britain allow stem cells to be harvested from 'spare' IVF embryos.
But taking stem cells from embryos is illegal in countries such as Germany, France, Ireland and Spain and blocked elsewhere.
The European Commission hopes the rules can be introduced by 31 December this year when a moratorium on EU funding for stem cell research ends.
But all member states must approve the rules before they can be introduced.
Laboratory sources
Supporters of stem cell research say it could hold the key to cures for a wide range of serious diseases, including Alzheimer's and Parkinson's.
Stem cells are cells at an early stage of development which have the potential to turn into many different types of tissue.
But critics say existing sources of stem cells - so-called 'lines' which can be grown in laboratories, can supply enough for research and would eradicate the need for embryos to be used in research.
In Germany, the law states research on stem cells is only allowed if they were imported and existed before 1 January 2002.
It is understood Germany wants the EU to introduce similar rules.
The European Commission has set a cut-off date of 27 June 2002 for when embryos must have been created - but it does not set a date for when stem cells should have been created by.
Foresight
EU Research Commissioner Philippe Busquin said the main aim was to stop a 'brain drain' of the brightest scientists leaving Europe to work in countries like the US, Australia and Singapore.
He said: 'Europe is in relatively weak position.
'Obviously there are ethical concerns. But the real question is 'Are we able to have excellence in this field in Europe?'.'
He said countries could continue to choose whether they funded embryonic stem cell research themselves, but that the EU felt it was important to encourage as much research as possible.
Sir George Radda, chief executive of the Medical Research Council, said: 'The decision to set a cut-off date for which embryos can be used is limiting and may mean fewer high-quality embryos available for research, but we recognise compromise was needed given the disparate views of member states.
'Overall we're pleased that the Commission has recognised the importance of granting funding to allow researchers to generate stem cells using freely donated embryos left over from IVF research.
'The MRC sees stem cell research as a key research priority over the coming decades and the UK government has had the foresight to put in place legislation that will enable ethical and beneficial research into heath and human disease to be carried out.
'It's good to see this being echoed in EC policy, as we are on the brink of real medical progress.'
A spokesman for the Parkinson's Disease Society said: 'The use of stem cell research offers real hope that lost dopamine-producing cells can be replaced with new healthy cells.
'This could be the first treatment to reverse the symptoms of Parkinson's and could therefore effectively lead to a cure.
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