Scientists believe stem cell research could lead to new cures
JC Watts, a leading congressman of Mr Bush's Republican party who opposes any government support for stem cell research, said the president had gone through "fair and balanced deliberation".
Actor Michael J Fox, an advocate for research into Parkinson's disease, said: "We're on the launch pad and [Mr Bush has] definitely given us clearance to go - but we don't know if he's given us enough fuel".
Some hardliners are dissatisfied, however, with a spokeswoman for the Family Research Council comparing the use of stem cells from embryos to taking gold fillings from the teeth of Holocaust victims.
One-quarter disagreed and one-quarter were undecided, the CNN/USA Today/Gallup poll indicated.
Medical benefits
Scientists believe tremendous medical benefits could be derived from research on stem cells taken from embryos.
The undifferentiated cells have the potential to become any type of cell - brain, heart, liver, bone and so on - and may help lead to cures for diseases such as Alzheimer's and Parkinson's.
"I have made this decision with great care and I pray it is the right one," Mr Bush said.
"This allows us to explore the promise and potential of stem cell research without crossing a fundamental moral line by providing taxpayer funding that would sanction or encourage further destruction of human embryos that have at least the potential for life."
Existing lines
Mr Bush said finance would be restricted to existing stem cell lines from embryos that had already been destroyed.
He said there are more than 60 such lines - cultures of stem cells that can be extended indefinitely.
Some scientists questioned whether there is enough genetic diversity among the relatively small number of lines to be useful.
Embryonic stem cell lines are created by removing an inner cell mass from a five- to seven-day-old embryo, a procedure which kills the embryo.
When properly nurtured, the cells are able to replicate themselves, creating what is called a stem cell line that provides continuing opportunities for research.
No cloning
Mr Bush's decision means that no federal funds will be spent on research on stem cells from newly destroyed embryos, nor will it allow the creation of any human embryos for research purposes or the cloning of any embryos for any purpose.
The president, an opponent of abortion, said it was important that "we pay attention to the moral concerns of the new frontier".
Democratic Senator Edward Kennedy, who backs the research,
said the decision was "an important step forward", but did not go far enough.
That was a view backed by many scientists, although there was relief that at least some stem-cell research would go forward with federal funds.
Mr Bush did not allow what many scientists were looking for - the "harvesting" of stem cells from some of the 100,000 embryos frozen in laboratories across the US.
The president deliberated for months on the issue, taking advice from bioethicists, lawmakers - and even Pope John Paul II, who opposes the research.