The campaigners want this research banned
The Department of Health said it might move now to close the loophole, but could also appeal against the verdict.
UK law was intended to ban reproductive cloning - the creation of human babies by cloning - but permit strictly licenced experiments on cloned cells to develop treatments for degenerative diseases.
'Disappointed scientists'
The alliance said that the way the current law was drafted meant it applied only to embryos created by the union of an egg and a sperm, not by cloning techniques.
"I think there will be many scientists and doctors, and patients who have incurable diseases, who will be disappointed because they will see this as a slowdown," said Dr Simon Fishel of the Centre for Assisted Reproduction as Park Hospital in Nottingham.
"Mr Justice Crane today stated there was simply no law governing cloned embryos," said Bruno Quintavalle, director of the Pro-Life Alliance.
Legitimate project
The campaigner conceded the government would probably legislate to close the loophole. However, he said: "What's clear from the judgment is that it's not just simply a matter of tinkering with the Human Fertilisation and Embryology Act; wholesale revision will ultimately be needed.
"Science has moved on - all sorts of technologies now exist that weren't dreamt about in 1990, and wholesale revision of the embryology law is now desperately needed."
The UK's controls on cloning are designed to place barriers in the way of anyone wanting to produce a child copy of a human being.
They were altered in 2001 to allow therapeutic cloning, but still aim to restrict the removal of cells from human embryos to a short period after creation - and then only after a licence has been issued to certify the project is legitimate.
'Loopholes and uncertainties'
The Pro-Life Alliance's challenge had already led to a suspension of the licensing process.
"The law as it stands at the moment is so full of loopholes and uncertainties that scientists could go right ahead and clone human embryos without any restrictions and without any possible sanction from the government," Mr Quintavalle told the BBC.
Research scientists want to be allowed to remove stem cells from human embryo clones shortly after creation and before they consist of much more than a few dozen cells.
Stem cells are the body's "master cells" - cells that can grow into virtually all other cell types.
Immune response
The hope is that these cells can be controlled to provide replacement tissues that can be used to treatconditions such as Parkinson's disease, motor neurone disease and diabetes.
If the stem cells were cloned from the patient, the treatment would be unlikely to provoke an immune response and make the use of anti-rejection drugs, with their sometimes strong side-effects, unnecessary.
Anti-therapeutic cloning campaigners say that there are alternative routes to gaining the same knowledge.
The Department of Health said on Thursday that it might appeal against the verdict, and that it might also consider introducing emergency legislation to ban human reproductive cloning, something it thought it had already banned.