The government is to launch a trial to test whether vaccinating badgers against tuberculosis can prevent the spread of the disease in cattle.
Researchers say the number of Bovine TB cases is rising
The National Farmers Union (NFU) says badgers should be culled, blaming them for the spread of Bovine TB.
But environmentalists cite a study which found the disease was more closely associated with cattle movements than proximity to badgers.
A further study found that many farmers have been hit hard by Bovine TB.
Farming Minister Ben Bradshaw announced the three-year vaccine field study - the first of its kind - to the Commons on Thursday.
The trial, estimated to cost £1.1m a year, will take place next year in an area of high Bovine TB prevalence in south-west England and will assess the protective effect of the vaccine.
"We will be injecting badgers with the vaccine during the study," Mr Bradshaw said.
"There are cases where this method of administration may be useful as an alternative to culling."
To that end, a further three-year project to create a version of the vaccine to be taken orally would begin in November 2005, Mr Bradshaw added.
The Veterinary Laboratories Agency will also be carrying out a study to prepare for similar trials in cattle, Mr Bradshaw announced.
The government has rejected calls from hundreds of vets, the National Farmers union (NFU) and the Conservatives for a badger cull, saying that would only happen if it could be justified by scientific evidence.
There was no way of telling whether a badger was infected with TB until it died, Mr Bradshaw said.
His announcement follows the findings of a study, released on Thursday, which found that Bovine TB is hitting many farmers harder than they were by the foot-and-mouth epidemic.
The number of cases is rising by 18% a year, with more than 22,000 infected cattle culled last year, researchers at Exeter University say.
The study assessed nearly 100 farms in south-west England hit by Bovine TB.
Infected cattle, or those suspected of infection, must be slaughtered and movement of animals is restricted.
These safeguards can last for years leading to large losses.
The National Farmers Union is now pressing harder for a controversial cull of wildlife, including badgers, to start as soon as possible.
South-west director Anthony Gibson said the number of farmers diversifying away from cattle to reduce the risk to their businesses was on the increase.
The best answer to the problem was to eliminate Bovine TB by "dealing with its reservoir in the wildlife population - principally diseased badgers", he said.
Conservationists had seized on a study, published in Nature, concluding that the movement of cattle around Britain was the most important known factor in the spread of bovine TB.