Professor Hiromitsu Nakauchi, director of the centre for stem cell biology and regenerative medicine at the University of Tokyo in Japan and who led the research, said: "Our ultimate goal is to generate human organs from induced pluripotent stem cells.
"The technique, called blastocyst complementation, provides us with a novel approach for organ supply. We have successfully tried it between mice and rats. We are now rather confident in generating functional human organs using this approach."
Professor Nakauchi, who presented the study at the annual conference of the European Society of Human Genetics, used a type of adult stem cell known as induced pluripotent stem cells, which can be taken from a sample of tissue such as the skin and encouraged to grow into any type of cell found in the body.
Together with his colleagues, he injected these cells taken from rats into the embryos, or blastocysts as they can be called, of mice that were unable to grow their on pancreas, the organ that produces important hormones including insulin.
When the mice matured to adulthood, they showed no signs of diabetes and had developed a pancreas that was almost entirely formed from the injected rat stem cells.
The scientists claim the rat stem cells grew in the niche left by the absent mouse pancreas and so almost any organ could be produced in this way.
If replicated using human stem cells, the technique could produce a way of treating diabetic patients by providing a way of replacing their pancreas.
The project has echoes of the bestselling book and film Never Let Me Go where clones are used to provide organ donations for the wealthy. In reality researchers are not allowed to create human embryos that lack the ability to grow organs and so they hope to do the same using pigs.
Professor Nakauchi said they hoped to further test the technique by growing other organs and were also seeking permission to use human stem cells.
They have, however, already managed to produce pigs that were able to generate human blood by injecting blood stem cells from humans into pig foetuses.
He said: "For ethical reasons we cannot make an organ deficient human embryo and use it for blastocyst complementation.
"So to make use of this system to generate human organs, we must use this technique using blastocysts of livestock animals such as pigs instead.
"Blastocyst complementation across species had never been tested before, but we have now shown that it can work."
Professor Chris Mason, chair of regenerative medicine at University College London, said: "There is no doubt that curing diabetes is challenging, but this could be a potential way forward albeit a very long shot requiring sustained resources and major finance for its testing and development."
"For something like a kidney transplant where it is not urgent, it would be highly attractive to be able to take cells from a patient, grow them in this way and deliver a personalised kidney."
"There is a long way to go before it could result in useable transplants, but it is an exciting vision."