The decision, from watchdog the National Institute for Clinical Excellence (NICE), should mean that thousands more children receive the treatment.

It comes on the day that new research again links a now-defunct source of the hormone with CJD.

HGH has been used by doctors to help stunted children grow normally since 1959.

It was originally collected from human pituitary glands, but is now made synthetically.

Only children with certain conditions, such as Turner syndrome in girls, Prader-Willi syndrome, and pre-pubertal children with kidney problems will be eligible for the drugs.

The decision is expected to cost the NHS up to £42m a year extra.

Currently it is estimated that 1,600 children with these conditions are receiving the drug.

Howevever, it is thought there may be as many as 4,800 children in the UK who are eligible for, but not receiving the drug.

A spokesman for NICE said: "Today's guidance will promote a consistent approach to NHS treatment for these children across England and Wales."

However, Dutch researchers have uncovered evidence that people who received treatment long before the switch to artificial supplies may still be at risk - even if they only received low dose treatment.

They have reported, in the Journal of Neurology Neurosurgery and Psychiatry, the case of a man who developed CJD 38 years after receiving human derived growth hormone.

Basic test

The 47-year-old man was given only a low dose as part of a diagnostic procedure, rather than being given full treatment, which may explain why the incubation period lasted so long.

He had delayed growth as a child, for which he underwent testing using a form of human derived growth hormone to exclude growth hormone deficiency when he was just nine.

The source of the hormone used is not known, but it is highly unlikely that this man would have developed CJD by chance, say the authors.

His symptoms began with numbness in both arms, which progressed to difficulty in walking and involuntary movements.

After eight months he was admitted to hospital and died five months later. CJD was confirmed at post mortem examination.

The authors concluded: "This case indicates that still more patients with iatrogenic (caused by medical treatment) CJD can be expected in the coming years.

"Another implication of our study is that CJD can develop even after a low dose of human growth hormone."

UK record

A spokesman for the Department of Health said treatment with natural human growth hormone was ended in May 1985 in the UK following the death of a US patient from CJD.

By March 2000, 34 out of the total of 1,900 people who had received the natural form of the hormone had died of CJD in the UK.

Some 170 had died of other causes, including the cancer of the pituitary gland which caused their original growth problems.

He told BBC News Online: "We don't know how many more human growth hormone patients might contract CJD as we haven't identified the causative agent, and cannot test for it.

"If low doses presented a risk I would have thought that other cases would have come to light before now."

Tam Fry, the chairman of the Child Growth Foundation, said that there were still dozens of adults given the hormone as children who were at risk of developing CJD.

However, he moved to reassure patients that the new version of the hormone was safe.

He said: "I wish to emphasise that the two versions of growth hormone have nothing in common.

"There is no danger of death for any child currently prescribed DNA growth hormone."