The American team says its method is more effective than the one used to create Dolly the sheep.

Dr Steve Stice: "Big breakthrough" (0'56")

They report in the journal Science that three clones of an unborn calf have been produced using the technique.

The team says the method could lead to cows genetically-modified to be immune to mad cow disease.

Despite the international debate over the ethics of cloning scientists believe producing clones from foetal animal cells will lead to new medicines.

Cheaper and faster

Dr Steve Stice, who led the American team at Advanced Cell Technology Incorporated, said: "We're reporting the ability to use cloning to produce not only cloned animals but genetically modified animals at the same time.

"We can make genetically modified animals much faster and less expensively than traditional methods of making genetically modified animals."

Dr Steve Stice explains the potential of his work (0'56")

These methods involve creating several thousand embryos and using as many surrogate mothers as possible to get just one or two healthy offspring.

The new method used just 28 embryos and 11 surrogate mothers to produce three healthy genetically engineered calves at a Texas research farm. The team that created Dolly had 247 false starts.

Dr Stice said the new technique promises value to farmers and consumers. As well as adding genes, genes could be removed from cells before cloning a group of animals.

He said: "One idea is to remove the gene that makes cows susceptible to Mad Cow Disease (BSE). That's one additional area that we and many other groups out there are interested in following up."

Dr Stice also says there could be benefits in human medicine by creating cows that produce large quantities of an important human blood protein in their milk.

Human serum albumin is given in large amounts to severe burns patients, accident victims and patients undergoing major surgery.