Scientists behind Dolly, the first cloned sheep, have developed the first designer chickens to produce anti-cancer drugs which could be worth billions of pounds to the creators.

Researchers at the Roslin Institute, near Edinburgh, have bred 500 of the genetically-modified hens and brought the prospect of mass-production of the drugs through chicken egg factories one step closer.

The ISA Browns, a common breed of egg-laying hen, have had human genes added to their DNA to enable them to produce complex medicinal proteins. These human proteins are secreted into the whites of the birds' eggs, from which they can be easily extracted to produce drugs.

Large quantities of an anti-cancer protein have been obtained from the whites of the eggs laid by the designer hens. The amounts produced were close to those needed for commercial production.

The technique will allow greater production of a wide range of drugs that cost the NHS thousands of pounds a year per patient and at a fraction of the cost of conventional manufacturing methods.

The Avian Transgenic Manufacturing project is a joint venture between the Roslin Institute, biotechnology firm Viragen and the British biotech firm Oxford BioMedica.

It is thought that the first chicken egg production line could be only a few years away.

One of the chicken lines produces human interferon of a kind closely resembling a drug widely used to treat multiple sclerosis. Another involves using a version of a Viragen antibody designed to treat malignant skin cancer but also potentially arthritis.

Dr Karen Jervis, of Viragen Scotland, said: "We have bred five generations of chickens so far, and they all keep producing high concentrations of pharmaceuticals. This is potentially a very powerful new way to produce specialised drugs."