BBC News Online looks at the implications.

GM animals on our farms - could it really happen?

Yes, is the simple answer. A number of cloned farm animals - including sheep, goats, cattle and pigs - exist around the world.

Research is under way to alter the genetic make-up of farm animals for the benefit of people - to get leaner, tastier meat for example.

Government must use this period to avoid the problems we had when the public suddenly became aware of the issues around GM crops

Malcolm Grant, AEBC chairman

In the United States, regulatory authorities are already looking at whether GM meat and milk should go on sale.

It will probably be some time though before GM animals arrive on British farms, if at all.

The report, by the Agriculture and Environment Biotechnology Advisory Commission (AEBC), looks at a number of future possibilities.

They include sheep producing medicines in their milk, goats producing GM spider silk and fast-growing GM salmon.

Is cloned meat safe to eat?

This is a difficult question that is likely to prove controversial.

So far, the issue has been looked at by an influential committee of US scientists.

The panel was set up by the National Academy of Sciences in response to a request by the US Government.

It said eating food made from cloned animals appeared to be safe but products made from GM animals could pose a risk to human health.

It also said cloned and GM animals raise significant concerns over environmental risks and animal welfare.

What does the AEBC report call for?

It recommends a number of measures:

• A new strategic advisory body to consider the development of GM animals - particularly farm animals

• A review of the relevant animal welfare legislation on animals and new regulations in a number of areas

• Independent scrutiny of how effectively existing farm animal welfare legislation is interpreted and enforced

• A system for monitoring the progress of GM and cloned animals to look for unexpected health or welfare problems

• No commercial development of GM fish in offshore fish farms while there remain significant uncertainties about the environmental impact of GM fish in the wild and keeping them contained in the fish farms

• Monitoring the international movement of GM and cloned animals and reproductive material.

Why think about it now?

The AEBC says it is vital for the public to get used to the idea of GM animals to avoid a repeat of the GM crop "problems".

"Government must use this period to avoid the problems we had when the public suddenly became aware of the issues around genetically modified crops and GM food on the shelves of supermarkets," says its chairman, Professor Malcolm Grant.

He says there has to be informed public debate and adequate regulatory structures in place before GM animals appear on farms or in the wild.