Scientists have shown that ordinary skin cells can effectively be converted into adult blood cells in a laboratory.
The Canadian team is now racing towards clinical trials, which could begin as early as 2012.
Leukemia patients could be the first to benefit, receiving transfusions of perfectly matched blood generated from their own skin. Scientists said laboratory-manufactured blood could help plug the gap caused by donor shortages.
Crucially, the process developed at a university in Ontario misses out the "in-between" stage of reprogramming cells into an embryonic-like state and then coaxing them to "differentiate".
With the new technique, the transformation into cells just a small step away from being fully mature and functional adult blood cells is direct.
The procedure could be used in surgery, to treat patients with anaemia and other blood conditions, and to prevent cancer therapy depleting the body's stock of blood cells.
The technique also holds out the promise of making other kinds of cell, including neuronal strains with the potential to treat brain diseases such as Parkinson's and Alzheimer's.
Dr Mick Bhatia, director of the Stem Cell and Cancer Research Institute at McMaster University at Hamilton, who led the discovery, said: "We don't envisage many obstacles. It's always hard to predict exactly when it will head to the clinic, but that is our direct aim right now.
"I see the first sets of patients as being patients suffering from leukaemia."
The breakthrough arose from observations made several years ago during early work on so-called induced pluripotent stem cells.
These are ordinary cells that have been genetically tweaked to make them revert to an embryonic state. They then adopt the characteristics and properties of embryonic stem cells.
Most importantly, they have the potential ability to grow into many different kinds of cell.
During the process, a small number of skin cells seemed to jump spontaneously to the stage of being immature blood cells.
Building on these studies, Dr Bhatia's team found a genetic and chemical recipe that made it possible to generate a full range of adult blood cell progenitors from skin cells called fibroblasts.
The "lineages" included different kinds of white blood cell, red cells and the cells that generate blood-clotting platelets.
Skin cells from both young and old people were used in the research to prove that age of donor made no difference to the process. A number of the cells were successfully grafted into mice.
Dr Bhatia said: "We have shown this works using human skin.We'll now go on to work on developing other types of human cell types from skin, as we already have encouraging evidence."
The scientists plan to assess what kind of production capacity might be possible with the cells, and whether they can successfully be stored in deep freeze.
Professor John Hunt, a leading stem cell scientist from the University of Liverpool, said: "This opens a lot of doors, and if we could produce red blood cells we'd be solving a big clinical need."