When Karen Brooks was pregnant with her younger daughter, she picked up a leaflet about a service that offered to store the stem cells from her baby's umbilical cord so that if ever her child needed a bone marrow transplant, it would have a perfect match. For Karen and Garry Brooks, whose eight-year-old daughter Robyn died in March of cancer, the decision to use the UK Cord Blood Bank for a £400 fee was obvious. "If we'd done the cord blood with Robyn, we would have had clean stem cells," says her father, a 44-year-old lorry driver from Rochdale. "It would have given her a better chance of recovery."

Instead, when Robyn was diagnosed with a neuroblastoma aged three, she underwent nine rounds of chemotherapy, two stem cell transplants and radiotherapy. Two years ago, when NHS doctors decided that nothing more could be done for her, Garry heard about an experimental programme in gene therapy at Sloan-Kettering memorial hospital in New York, raised $1.4m for Robyn's medical bills, and moved the family to the US. "It was real rocket-science stuff," says Garry, "and it extended her life for two and a half years."

But while they were in New York, Robyn's cancer came back and she died there, the same day Karen discovered that she was pregnant again. Since doctors had told the Brookses that Robyn's blood might have been infected with cancer cells from birth, their new daughter Sasha Robyn underwent tests in utero and she was born in perfect health last month.

If Robyn had the use of her own stem cells, says Karen, it could have given her immune system an incredible boost. "Her blood counts were always low, so her body could never recover. It would have definitely helped her," she says. The Brookses are taking no chances with Sasha and have banked her blood as a safeguard.

After Sasha's umbilical cord was cut and tied, 80ml of her blood containing a high concentration of stem cells was drawn from the cord and delivered by FedEx to the UK Cord Blood Bank laboratory in Boston. There the blood is tested and stored for possible future use. "My newborn's got 800 million stem cells, a crazy amount," says Garry. "Who knows what's going to be happening in the future, but at the end of the day, it could save lives and thousands of pounds."

Stem cells drawn from cord blood are already being used in the treatment of conditions ranging from leukaemia and Hodgkin's disease to inherited disorders such as sickle cell disease. Earlier this year, six-year-old Charlie Whitaker, born with diamond blackfan anaemia, received a transplant of stem cells from his brother Jamie's umbilical cord. Although his condition has been cured, his parents had to undergo IVF in America after being refused permission in the UK to screen embryos to find a perfect tissue match.

Although these are extreme cases, an increasing number of parents are banking their children's cord blood. And the complexity of these issues is fuelling a growing conflict between private cord blood banks, the NHS and the medical establishment.

Sean Brooks, the marketing manager for UK Cord Blood Bank, says parents using his service are facing growing resistance from hospitals and midwives. Last month, a Midlands hospital refused to allow a couple to have either their midwife or doctor collect the stem cells after the delivery. "The father was handed the umbilical cord and the placenta in a basin and he went outside into the parking lot and did the procedure himself," says Brooks. The hospital cited concerns about legal action if their medical staff did not collect enough cord blood.

Brooks dismisses these fears as unfounded, but says that many parents have reported that hospitals are refusing to extract cord blood for no apparent reason. Shamshad Ahmed, director of the UK-based Smart Cells International, which offers a similar service, says: "We do find situations where there's a hospital in one area that's happy to do this collection but five miles down the road, there's a complete ban."

Neither do the private blood banks yet have backing from the Royal Colleges. Sue Macdonald, a representative of the Royal College of Midwives, says that her organisation does not support commercial collection. "It's a fiddly thing to do after delivery," she says. "The midwives have other priorities. The primary purpose of our care is the mother and baby, and this is a side issue.

"We don't know about the long term," she goes on. "You might have an idea that if you collect your stem cells it will help your baby in the future, but we don't know if it's going to be as effective as the private companies claim it will be."

Professor Pete Braude, who chairs the Royal College of Obstetricians and Gynaecologists' scientific advisory committee, says the chance of an individual needing to use their own stem cells for transplant is one in 20,000. Even then, he adds, the stem cells need to be cultured to create an expanded population and that still requires a lot of research. Instead, he says that the European Union's ethics working committee on stem cells is pushing for an expansion of existing national blood banks.

But the private companies point out that while demand for the service is growing, the NHS service that collects stem cells from anonymous donors for a national registry operates routinely in only three hospitals in north London. Once the blood is tested, it is placed on bone marrow registers and can be used worldwide. "With the private service, people are only saving for their own family use," says Sue Armitage, head of the Cord Blood Bank, "In most families, transplant is quite a rare event, but we've got people donating for anyone's use." The bank has issued 80 units of cord blood since they opened in 1996 and have about 7,000 units banked. Armitage says her service is proposing to bank another 20,000 units from selected hospitals with large maternity units and believes a bigger national service is the answer.

Whatever reservations there might be, stem cell transplants from cord blood are already saving lives and there is a growing demand for it. In the US, more than 100,000 units are taken every year, and in at least two states, obstetricians are legally required to give pregnant patients information about cord blood banks. Smart Cells International estimate their UK collections at 150 a month and Ahmed says the issue won't just go away. "The figure of one use in 20,000 is ridiculous," he says. "One shouldn't focus on whether it's one in 10 or one in ten million, but on whether it works. And it does."

For Mark Behan, a Northamptonshire police officer whose seven-year-old daughter Caitlin suffers from a rare form of anaemia and who has just received a vital stem cell transplant from an anonymous donor in Spain, there's no question that national registers are the way forward. "My experience has made me very evangelical about many things," he says. "For a small amount of time and effort and because it doesn't affect you in any way, why wouldn't you do it? Cords aren't a panacea, but through a donation, you can save someone's life."