Mario Capecchi and Oliver Smithies of the United States and Martin Evans of Britain have won the Nobel Prize for medicine for their contribution in the field of stem cell research.

The trio were honoured for discovering how to genetically manipulate mouse embryonic stem cells, leading to lab rodents that replicate human disease, the Nobel jury in its citation said. They won the award for their work in creating 'knock out mice', the 21st century test-bed for biomedical research.

Their work led to a powerful and widely used technique to manipulate genes in mice, which has helped scientists study heart disease, diabetes, cancer, cystic fibrosis and other diseases.

The $1.54 million prize was awarded Monday to Capecchi, 70, of the University of Utah in Salt Lake City; Oliver Smithies, 82, a native of Britain now at University of North Carolina in Chapel Hill, and Sir Martin J. Evans, 66, of Cardiff University in Wales.

Their "gene-targeting" technique lets scientists deactivate or modifying individual genes in mice and observe how those changes affect the animals. That in turn gives clues about what those genes do in human health and disease.

The work has had "a revolutionary effect on the ability to understand how genes work," said Richard Woychik, director of The Jackson Laboratory in Bar Harbor, Maine, a centre for mouse genetics.

The prize is a particularly striking accomplishment for Capecchi. A native of Italy, he was separated from his mother at age 3 when the Gestapo took her to the Dachau concentration camp as a political prisoner in 1941. His mother, a poet, and his father, an Italian military officer, were not married.

Capecchi spent a year with a peasant family, until the money his mother left for his care ran out. At age 4, "I started wandering the streets," he recalled Monday. For about four years, he lived on the streets or in orphanages, and he ended up in a hospital with malnutrition.

The three prize-winning scientists mostly worked separately, although they exchanged information about their research. Evans identified embryonic stem cells in mice, while the gene-targeting technique used on those cells came from work by Capecchi and Smithies.

Capecchi's work has uncovered the roles of genes involved in organ development in mammals, the committee said. Evans developed strains of gene-altered mice to study cystic fibrosis, and Smithies created strains to study such conditions as high blood pressure and heart disease.

To create gene-altered mice, researchers introduce a genetic change into mouse embryonic stem cells. These cells are then injected into mouse embryos. The mice born from these embryos are bred to produce offspring with the changed genes.

In 1989, the first mice born with genes manipulated through the technique was announced. More than 10,000 different genes in mice have since been studied this way, the Nobel committee said. That's about half the genes the rodents have.

Apart from making mice with altered DNA, the work has also shown how to manipulate genes in human embryonic stem cells for lab research. Such basic studies can help scientists learn how to turn the cells into specialized cells that might prove useful in therapy, said Doug Melton, co-director of the Harvard Stem Cell Institute.

And scientists hope that by putting disease-related genes into human embryonic cells for lab studies, they can learn how the diseases develop and screen potential therapies, said John Gearhart, a stem cell expert at the Johns Hopkins School of Medicine.

The prize-winning work has "formed the foundation for much of what we do" in human embryonic stem cell research, Melton said.

Evans, asked Monday about the prize while visiting his daughter in Cambridge, England, said, "I haven't come to terms with it yet. In many ways it is the boyhood aspiration of science, isn't it? And here I am unexpectedly with it. It's amazing."

Moments after a 5 a.m. call from Sweden, Smithies called the Nobel "very gratifying". "My work was never toward getting the Nobel Prize," Smithies told The Associated Press over a cup of tea at his lab a few hours after the Nobel committee called with the news. "It was solving a problem, and enjoying the solution".

Smithies said he hopes winning the prize will make it easier to secure funding for other work. The medicine prize was the first of the six prestigious awards to be announced this year. The others are chemistry, physics, literature, peace and economics.

The prizes are handed out every year on Dec. 10, the anniversary of award founder Alfred Nobel's death in 1896.

Since the medicine prize was first awarded in 1901, 90 Americans and 29 Britons have received it.