'We plan to carry out the investigation on about 40 patients to start with, people who have already undergone chemotherapy or bone marrow transplants but are not improving,' said Junichi Kitakoji, deputy manager of the firm's public affairs department.

'There has been a great deal of research on this already, at universities in the US and Europe, but this will be the first clinical investigation in the world,' said Mr Kitakoji.

The study has been approved by the Ministry of Health, Labour and Welfare and will begin at 22 Japanese hospitals.

NGOs that support people left disabled by the side effects of the drug, however, are urging caution.

'I don't necessarily think this is a bad thing, but the ministry and the company must accept that it has an element of danger,' said Kiyoshi Mamiya, of the Thalidomide Welfare Organisation.

'The safety requirements and handling rules are much tighter today than they were 40 years ago, it is true, but we want them to adhere to those rules and be very careful,' he said. 'Otherwise, we fear that we could have another serious situation on our hands.'

According to the NGO, 309 people in Japan were born with varying degrees of birth defects after their mothers took the drug to combat morning sickness.

Thalidomide was developed in West Germany and went on sale in Japan under 12 brand names in 1958.

It was only withdrawn from the market in 1963, two years after Britian had withdrawn it from the list of approved medicines.

Typical side-effects for babies included shortening of arms and legs and, in some cases, virtually no arms or legs.

The drug also affected the cardiovascular system, intestines, kidneys and senses.

An estimated 10,000 people were born with disabilities linked to thalidomide, which was also responsible for a high infant mortality rate.

In 1970, Chemie Grunenthal, the German company that marketed the drug, agreed to pay millions in an out of court settlement to 2,866 children with deformities attributable to thalidomide.

Lawsuits brought by Japanese victims led to further compensation agreements. 'Thalidomide was used in Japan and we are very aware that there were problems, but we have a high standard of clinical practices that did not exist then,' said Yoshikazu Hayashi, deputy director of the health ministry's Licensing Division.

'Fujimoto Pharmaceutical will be conducting an investigation with the utmost care that the adverse effects are not repeated,' he said. 'It is of the highest importance that we avoid that situation.'

The ministry approved thalidomide as a priority research medicine - or 'orphan drug' - after Fujimoto Pharmaceutical applied last year to use it to combat cancer. An orphan drug is one used to treat rare but severe diseases.

'Most of the patients who will be treated with thalidomide are elderly, in their 60s, and we expect good results from this investigation,' said Mr Kitakoji.

'We believe it may help between 30 per cent and 40 per cent of the test group.'

New promise

1953: Swiss pharmaceutical company, Ciba, synthesises thalidomide

1954: German company Chemie Gruenenthal continues the drug?s

development and tries marketing it as an anticonvulsant for epilepsy

1957: Thalidomide is marketed for morning sickness and nausea and

soon becomes the ?drug of choice to help pregnant women?

1961: The drug was taken off the market in many countries after

being linked to birth defects. Use continues in the developing world

1968 ? 2004: Lawsuits around the world see compensation paid to

some 5,000 thalidomide survivors

Today thalidomide is used to treat leprosy, and is being trialled as a

treatment for other diseases such as Aids and cancer