BBC Science Correspondent James Wilkinson reports

If successful, the test could be used to screen blood donations to ensure they do not carry the agent that causes CJD - the human form of BSE.

The new test will be based on an existing technique developed by the biotech firm Proteus International. It is currently being used in the Republic of Ireland to make sure meat products removed from cow carcasses are not contaminated with BSE.

The government wants to know if this technique can be developed into a screening test for CJD in human blood.

Blood supplies

Although there is no evidence that CJD - Creutzfeldt-Jakob Disease - can be passed on in blood, the decision has already been taken to treat donated supplies to remove any risk of transmission.

But leucodepletion - the removal of white blood cells - is time consuming and expensive. Some reports suggest it will cost the health service millions of pounds. It is also not 100% effective.

For these reasons, a test for the agent that causes CJD would be preferable.

If it can be made to work, it may also be possible to use the test to diagnose CJD in patients before any symptoms have developed.

Research facility

This might allow doctors to treat patients earlier, should an effective treatment also emerge one day.

The government has pledged £500,000 to set up a research facility within the Public Health Laboratory Service in Leeds.

It has asked microbiologist Stephen Dealler, an outspoken critic of government policy in the past, to help develop the test.

Dr Arthur Rushton, development director at Proteus, said the company's technology was offered to the Ministry of Agriculture several years ago but was rejected.

"I think there has been a sea change in the attitude of the government, and quite rightly."