The trial will compare the survival of red blood cells grown in the lab with that of standard red cells from blood donors.
The UK's NHS (National Health Service) Blood and Transplant say manufactured blood will be used in clinical trials with human volunteers within 2 years.
The aim is one of several that the joint England and Wales special health authority has entered into with top universities to develop transfusion, transplantation and regenerative medicine over the next 5 years.
The intention is not to replace human donation, says Dr. Nick Watkins, NHS Blood and Transplant assistant director of research and development, but to offer specialist treatment for specific patient groups.
The health authority say there is a need to increase the availability of better-matched blood for patients with rare blood types. These include patients with blood conditions like sickle cell anaemia and thalassemia, who require regular blood transfusions.
The authority collects 1.7 million units of blood each year. Hospitals in England and Wales need around 6,000 units a day, they say, and volunteer blood donors are vital.
The pressure is building not only because of demand, but also because of a shortage of donors. In 2014, 40% fewer people volunteered as new donors compared with 10 years earlier.
To ensure the nation's stock of blood remains at a safe level, NHS Blood and Transplant say there is a need to recruit 204,000 donors in 2015.
Teams around the world are trying to develop artificial blood
Dr. Watkins says teams around the world have been trying to make artificial red blood cells as an alternative to donated blood, and adds:
"We are confident that by 2017 our team will be ready to carry out the first early phase clinical trials in human volunteers."
The team includes scientists from NHS Blood and Transplant and the Universities of Bristol, Cambridge and Oxford, also in the UK.
The first trial is likely to be small - 20 volunteers will be transfused with a small amount (5-10 mls) of lab-produced blood. It will compare the survival of red blood cells grown in the lab with that of standard red cells from blood donors.
The scientists are using induced pluripotent stem cells (iPSCs) sourced from adult and umbilical cord blood to make the lab-grown red blood cells.
"Research has laid the foundation for current transfusion and transplantation practices," Dr. Watkins explains, and adds:
"The manufactured red cell trials form part of our world-leading work in regenerative medicine and one of eight research goals for 2015-2020 that will bring long-term improvements for patients and donors."
In 2013, Medical News Today reported a study that suggested the shelf life of blood is nearer to 3 weeks than the 6 weeks that blood banks regard as standard for blood used in transfusion. The researchers came to this conclusion after showing that red cells in stored blood lose their ability to deliver oxygen where it is most needed once the 3-week shelf life is exceeded.