New experiments carried out on mice suggest it may be possible to replicate embryonic stem cells from skin patches, rather than having to use embryos.
Stem cells could potentially provide cures for many diseases
Japanese and US researchers made the discovery, which represents a key breakthrough in stem cell research.
If the same can be done in humans, it could lessen or remove the need for the controversial use of embryos.
It is hoped stem cells will one day be used to replace tissue damaged by diseases like Parkinson's and MS.
They are the body's "master" cells, and can in theory be transformed into any type of tissue in the body.
Until recently, the most obvious source of this type of cell was from human embryos themselves - but the use of embryos is fiercely opposed in some quarters as unethcial.
Embryonic stem cells can turn, stage by stage, into any cell type in the body, but the process is extremely difficult to research, and has produced only limited success.
The latest research, published in the journal Nature, used a cell called a fibroblast, which can be found just under the skin surface.
By genetically manipulating fibroblasts from mice, the scientists "switched" them back to an embryonic state, and were able to develop them into a variety of different tissue types.
The advance was strengthened further by the fact that three different teams of researchers - from the Whitehead Institute in Cambridge, Massachusetts, the Harvard Stem Cell Institute, and Kyoto University in Japan - produced exactly the same result using the same technique.
Professor Rudolf Jaenisch, who led the Whitehead team, said: "These reprogrammed cells, by all criteria that we can apply, are indistinguishable from embryonic stem cells."
Dr Lyle Armstrong, a lecturer in stem cell biology at the University of Newcastle, described the findings as a "valuable and important" development.
He said: "If the same technique works for human cells we can find out a lot about how their genomes were reprogrammed."
However, he said that the technique would need to be refined to be safe to use in human treatments, as the mouse experiment used a retrovirus to make the genetic tweaks to the cells.
Elsewhere, scientists are developing another method of stem cell research - by potentially eliminating the need for an unfertilised human egg in cloning experiments.
At present, a cloned embryo of the patient would have to be produced to supply embryonic stem cells for treatment.
Each of those embryos requires a human egg to carry the patient's genetic material, and these are scarce.
The Harvard University research - also published in Nature - managed to convert the "genetic identity" of a mouse embryo by temporarily halting its development at a very early stage, then inserting the genetic components from a different mouse.
This opens the possibility of using unrelated human embryos, which are in theory more plentiful, as many are created but never implanted during the IVF process, and either discarded or frozen.