Scientists at Cambridge University collaborated with Israel's Weizmann Institute of Science and used stem cell lines from embryos as well as from the skin of five different adults.
Researchers have previously created live baby mice using engineered eggs and sperm, but until now have struggled to create a human version of these 'primordial germ' or stem cells.
Ten different donor sources have been used so far and new germ-cell lines have been created from all of them, researchers said.
A gene called SOX17, previously considered to be unimportant in mice, has turned out to be critical in the process of 'reprogramming' human cells, researchers said.
"We have succeeded in the first and most important step of this process, which is to show we can make these very early human stem cells in a dish," said Azim Surani, professor of physiology and reproduction at Cambridge, who heads the project.
Jacob Hanna, the specialist leading the project's Israeli arm, said it may be possible to use the technique to create a baby in just two years.
"It has already caused interest from gay groups because of the possibility of making egg and sperm cells from parents of the same sex," he said.
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