The treatment involves injecting neural stem cells developed from human fetuses into patients' brains in the hope they will repair areas damaged by stroke, thereby improving both mental and physical function.
The final green light from Britain's Gene Therapy Advisory Committee (GTAC), announced on Wednesday, follows months of delays and questions, reflecting the ground-breaking nature of the research. The trial is the first of its kind in the world.
ReNeuron received an okay from Britain's main drugs watchdog back in January 2009 but still needed a recommendation from the GTAC before it could start the Phase I clinical trial.
Shares in the company gained 12.5 percent to 7.85 pence by 0845 GMT on the news.
The first patient in the study is now expected to receive treatment through the National Health Service at the Institute of Neurological Sciences, Southern General Hospital, Glasgow, during the second quarter of this year.
In total, 12 patients will get ReNeuron's ReN001 cell therapy between six and 24 months after having an ischaemic stroke -- caused by a blockage of blood flow in the brain -- and their progress will be followed for two years.
The procedure involves the direct injection of millions of cells into the affected brain region.
If the first study is successful, researchers plan to pursue accelerated clinical development in later-stage clinical trials, focusing initially on more severely disabled stroke patients.
About half of all stroke survivors are left with permanent disabilities as a result of brain damage.
The potential of different kinds of stem cells -- master cells that can develop into specialized tissue in the body -- is being examined by experts around the world for many diseases.
But the technology is controversial, in part because some stem cell lines are derived from embryos or fetuses.
ReNeuron had hoped to test its stroke treatment in the United States but switched its efforts to Britain in 2008 following delays at the Food and Drug Administration.
The group became Europe's first stem cell company to float in 2000, but was taken private in 2003 after a series of clinical setbacks and the bursting of the technology bubble hammered its share price. It relisted in 2005.
(Editing by David Holmes and Hans Peters)