The last barrier to the creation of babies specifically to save the life of an ailing brother or sister was swept away by the fertility regulatory body yesterday to the delight of scientists and alarm of those who fear the advent of a designer baby age.

The decision of the Human Fertilisation and Embryology Authority gives new hope to the parents of a two-year-old boy with a potentially fatal blood disorder who want to select a baby who will be a tissue match for their son.

But doctors and regulators insisted yesterday that strict controls and decisions taken on a case-by-case basis will continue to prevent the selection of babies for their hair or eye colour or their intelligence, should that ever become possible.

The boy, Joshua Fletcher, from Northern Ireland, suffers from Diamond Blackfan anaemia, which can only be cured by a bone marrow transplant. His parents have not been able to find a tissue match. They asked the HFEA for permission to have their embryos, to be created in the fertility lab, tested in the hope of finding a sibling who can be a donor. The baby's umbilical cord blood would be used for the transplant.

The full 18-member HFEA decided in a landmark ruling to change the rules so that tissue-matching tests could be carried out on embryos even though they are not directly in the interest of the future baby, but would only benefit the sick brother or sister. The authority concluded that research had shown the tests, although invasive, did no harm to the embryo and were acceptable if they might save a child's life.

Fertility doctors lined up to applaud the decision. "The often-used term 'designer baby' is misleading here - we are not talking about engineering a child to have a certain hair colour or aesthetic characteristic. This is about families being able to make a decision that their new baby could save the life of its older brother or sister," said Alison Murdoch, chairman of the British Fertility Society.

"These are difficult, distressing and complex real-life situations... it is important that the views and interests of the patients are always put first."

Simon Fishel, who runs the Care fertility clinic at the Park hospital in Nottingham, said: "I have no doubt that this is the right decision.

"The previous stance of not allowing the selection of an embryo for tissue typing in our society was ethically unjustified. In the real world these families are often faced with trying to conceive a tissue-matched child through natural conception and this can result in numerous heartbreaking terminations of pregnancy, the birth of children not tissue matched or further children with a life threatening disease."

Lord Robert Winston, professor of fertility studies at Imperial College, London, dismissed the designer baby fears. "There seems little problem for our society as a whole if a few families at risk decide to conceive a baby of a particular tissue type."

The debate about whether to allow selective conception in particular medical cases began when an application by Jayson and Michelle Whitaker, whose son Charlie had the same condition as Joshua Fletcher, was turned down by the HFEA in 2002 on the basis that there was no benefit to the potential baby.

There was a public outcry over a perceived anomaly, because Raj and Shahana Hashmi had earlier been given permission to undergo the same procedure. Their son Zain suffers from thalassaemia. Because embryos can undergo a genetic test to ensure they do not carry thalassaemia (unlike Diamond Blackfan anaemia), the HFEA permitted tissue typing to take place.

Yesterday the HFEA said in a statement that it was now satisfied there is no increased risk to the embryo from the tissue typing test. "The HFEA has now carefully reviewed the medical, psychological and emotional implications for children and their families as well as the safety of the technique. There have been three further years (since the policy was laid down in 2001) during which successful embryo biopsies have been carried out, both in the UK and abroad, and we're not aware of any evidence of increased risk."

The HFEA chairwoman, Suzi Leather, said that research showed that the babies were not harmed and that the transplant risks were low. "Faced with potential requests from parents who want to save a sick child, the emotional focus is understandably on the child who is ill," she said.

But David King, director of the pressure group Human Genetics Alert, said: "It is wrong to create a child simply as a means to an end, however good that end might be, because to do so turns that child into an object. This violates the basic ethical principle that we should not use people as tools."