The president signed an executive order reversing predecessor George W. Bush's ban, which critics say hampered the fight to find treatments for grave diseases such as Alzheimer's, Parkinson's and diabetes.

Warning that scientists were deserting the United States for other nations, Obama said "medical miracles" come about only through painstaking research and rejected the "false choice" between sound science and moral values.

"When government fails to make these investments, opportunities are missed. Promising avenues go unexplored," he said at a White House ceremony attended by US lawmakers, religious leaders and scientists including three Nobel laureates.

"Ultimately, I cannot guarantee that we will find the treatments and cures we seek. No president can promise that," Obama said.

"But I can promise that we will seek them -- actively, responsibly, and with the urgency required to make up for lost ground," he said, paying tribute to research advocates such as late Superman actor Christopher Reeve.

"Not just by opening up this new front of research today, but by supporting promising research of all kinds, including groundbreaking work to convert ordinary human cells into ones that resemble embryonic stem cells."

Obama directed the National Institutes of Health to formulate guidelines within 120 days on how to proceed with federal research on lines of stem cells procured from private laboratories such as fertility clinics.

His order cannot affect a congressional ban on federal money being used directly to create new stem cells, which are primitive cells from early-stage embryos capable of developing into almost every tissue of the body.

Obama also issued a presidential memorandum "restoring scientific integrity to government decision making."

The memorandum marked another break from the Bush years, after claims the former administration prioritized partisan politics over objective science in climate change, endangered species and family planning.

Obama ordered the White House Office of Science and Technology Policy to ensure that "we base our public policies on the soundest science," and appoint scientific advisors based on expertise and "not their politics or ideology."

He vowed that he would not permit stem cell research to stray into the wilder bounds of science such as human cloning, which he said "has no place in our society, or any society."

But there was still fierce fire from social conservatives and right-to-life groups, who back research on cells taken from human adults rather than embryos.

House of Representatives Republican leader John Boehner said Obama had undermined "protections for innocent life, further dividing our nation at a time when we need greater unity to tackle the challenges before us."

US Catholic Cardinal Justin Rigali called Obama's announcement "a sad victory of politics over science and ethics."

But Reeve Foundation president Peter Wilderotter said: "By removing politics from science, President Obama has freed researchers to explore these remarkable stem cells, learn from them and possibly develop effective therapies using them."

And veteran Democratic Senator Edward Kennedy, who is battling a malignant brain tumor, said Obama had "righted an immense wrong done to the hopes of millions of patients."

"The president's action today unlocks the enormous potential of life-sustaining medical progress against a wide range of serious illnesses and injuries, all within strong ethical guidelines," he said.

Bush barred federal funding from supporting work on new lines of stem cells derived from human embryos in 2001, allowing research only on a small number of embryonic stem cell lines that existed at the time.

The former president argued that using human embryos for scientific research -- which often involves their destruction -- crossed a moral barrier and urged scientists to consider alternatives.

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