Anti-abortion campaigners have lost their legal challenge to the rules that control cloning and embryology research in this country.

The Court of Appeal rejected their argument yesterday that the 12-year-old regulations did not cover embryos created using the cloning techniques that made Dolly the sheep. The judgment removes any ambiguity over the framework that regulates research into cloning methods in the United Kingdom.

Lord Phillips of Worth Matravers, the Master of the Rolls, said that recent research into cloning represented an "enormous advance" in human health, especially in terms of transplant surgery.

"If Parliament had known of the cloning technique in 1990 [when it passed the Human Fertilisation and Embryology Act] it would certainly have been included in the legislation which controls research and use of embryos. It is essential to bring the creation and use of embryos under strict control for ethical reasons," he argued.

But Bruno Quintavalle, director of the anti-abortion group called the Pro-Life Alliance, said the ruling was "outrageous", with the judges "riding roughshod" over the law. He said the legal battle would continue.

"It is an outrageous judgment from a legal point of view and leaves the law in an unsatisfactory state," Mr Quintavalle said. "There is nothing to stop one-cell embryos being implanted in women. It appears judges can now rewrite legislation, going beyond any limits which have been recognised before by the courts."

After winning the High Court case in November, the Pro-Life Alliance claimed UK cloning experiments could not be properly licensed and that the legislation covering all embryology research should be reviewed. Mr Justice Crane ruled against the Government after the anti-abortion campaigners highlighted the Act's definition of an embryo as the union of an egg cell and a sperm cell.

By contrast, the Dolly technique – cell nuclear transfer (CNR) – does not use sperm to create an embryo.

Alan Milburn, the Health Secretary, immediately introduced the Human Reproductive Cloning Bill – rushed through Parliament in December – to outlaw the placing of any embryo in a woman's womb that was not created by a fertilisation process. He then took the case to the Court of Appeal.

At the hearing which ended yesterday, counsel for Mr Milburn, Kenneth Parker QC, told the court that an organism created by CNR could, in fact, be classified as an embryo. He said that such an organism did fall within the meaning of the 1990 Act even if it was not the product of fertilisation. "CNR creates an organism which is exactly the same as an embryo," he told the judges.

The Pro-Life Alliance was ordered to pay the legal costs of the case, estimated to be £100,000. Permission to go to the House of Lords was refused but the Alliance said it would petition the law lords directly.

A spokesman for another anti-abortion group, the Society for the Protection of the Unborn Child, said: "The court has interpreted the law in an alarmingly elastic way so as to allow destructive research on human beings created through cloning. Such shifting of the goalposts is unacceptable."