Researchers at the Roslin Institute near Edinburgh, which created Dolly the cloned sheep, have bred a 500-strong flock of the birds.

The breakthrough offers the prospect of mass-producing drugs that currently cost the NHS thousands of pounds a year per patient, at a fraction of the price.

The ISA Browns, a common breed of egg-laying hen, have each had human genes added to their DNA to enable them to produce complex medicinal proteins. These human proteins are secreted into the whites of the birds’ eggs, from which they can be easily extracted to produce drugs.

The Roslin scientists have achieved a world first in creating birds that “breed true”, meaning the added human genes are passed on from generation to generation. This opens the way for the creation of industrial-scale flocks and offers a potentially unlimited cheap source of medicinal proteins.

One of the chicken lines produces human interferon of a kind closely resembling a drug widely used to treat multiple sclerosis. Such drugs have a potential worldwide market worth hundreds of millions.

Another line could be useful in treating skin cancer, by producing miR24, an antibody that could also potentially treat arthritis, which afflicts 7m people in Britain.

The institute is understood to have created at least two other lines of genetically modified chicken, whose eggs could produce drugs with the potential to fight cancer.

The research is a triumph for Dr Helen Sang, the leader of the Roslin team who, since 1997, has sought to make the technique work without new genes being lost as they are transmitted down the generations. Ian Wilmut, the Edinburgh University professor who created Dolly at Roslin, was an adviser on the project.

“This is potentially a very powerful new way to produce specialised drugs,” said Dr Karen Jervis of Viragen Scotland, a biotech company that is working closely with Roslin. “We have bred five generations of chickens so far and they all keep producing high concentrations of pharmaceuticals.”

Other researchers have already produced transgenic chickens — with artificially altered DNA — but the ability to make desirable proteins has generally vanished in a generation or two.

At present, therapeutic proteins are mainly made in bio-reactors, vats of bacteria or other cells that have been genetically modified. However, extracting the relevant proteins is expensive and difficult.

In Roslin’s research — to be published in the Proceedings of the National Academy of Sciences tomorrow — the scientists will describe how they extracted embryonic cockerels from hens, before the eggs had formed.

The embryos, just small clusters of cells, were then each injected into surrogate eggs and “infected” with a virus genetically modified to contain human genes. These genes contained the blueprint for the human proteins that the researchers were trying to produce.

The virus carried those human genes into the cells of the embryonic cockerels where they became incorporated into the bird’s DNA.

When the so-called “founder cockerels” hatched, they were mated with ordinary female hens. Their progeny were found to contain the same human genes and, to the delight of the researchers, the females all produced the desired protein in their eggs.

“In theory, this technique could be used with a wide range of genes, so that hens could be used to make many different proteins,” said Andrew Wood of Oxford BioMedica, whose researchers collaborated on the project. “Potentially, this could lead to treatments for ill-nesses including Parkinson’s Disease, diabetes and a range of cancers.”

The ISA Brown, a French breed that is a cross between Rhode Island Red and Rhode Island White chickens, produces about 300 eggs, per hen, a year.

Some scientists are cautious about the advance, pointing out that biotechnol-ogy firms have been promising a new generation of drugs from transgenic animals for nearly two decades.

So far, however, perhaps the world’s most successful transgenic animal is the glofish — a tropical fish modified with DNA from a sea anemone and a jelly fish to give it a fluorescent skin. It is used as a pet.

Last year saw a breakthrough for such technologies when European regulators approved the world’s first medicine derived from transgenic animals. ATryn, an anticlotting agent for people with a rare inherited disease, is made from the milk of goats whose DNA has been modified to incorporate human genes.

Dr Barbara Glenn of Bio, which represents the American biotech industry, said the Roslin research was likely to be the first of many similar breakthroughs. “This technique is simply a way of producing human proteins, which is why it is applicable to so many different diseases,” she said.

For the NHS, the hope is that such technologies will help to minimise its annual bill for prescription drugs which was £8 billion last year; an increase of 46% since 2000.

Andrew Tyler, the director of Animal Aid, which campaigns to improve animal welfare, said genetically manipulating farm animals was a reckless and dangerous procedure. “The fallout for the animals of creating GM individuals in enormous. The modification process produces many casualties, with young animals being born with defects and females suffering miscarriages and other problems,” he said.

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