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The treatment works like a vaccine and could be available within five years. Cells would be taken from the body, altered, and injected back into the affected joint.
A team at Newcastle University will now test the vaccine on volunteers with the disease.
Scientists in the field are extremely excited about the development.
There are 350,000 people in the UK with rheumatoid arthritis, which is a condition where the body's immune system attacks the joints, unlike oestoarthritis which is more like wear and tear of the joints.
Rheumatoid arthritis is difficult to treat because it is caused by a malfunctioning immune system, causing inflammation in the wrong places.
Prof Alan Silman, medical director of the charity Arthritis Research Campaign, which funded the research, said: "This is an important potential cure. It is possible one injection could switch off the abnormal immune response.
"If it works it could reverse the disease and stop further episodes."
The Newcastle team will test the effectiveness of the new vaccine in eight volunteers with rheumatoid arthritis from the Freeman Hospital as part of a pilot study, which could then lead to larger trials.
The vaccine works by reprogramming the body's own immune cells.
Using chemicals, steroids and Vitamin D, the team has devised a way to manipulate a patient's white blood cells so they surpress, rather than activate, the immune system.
It is thought the cells will then act as a brake on the over-reacting immune system and stop it attacking its own joints.
Although a similar technique has been used in cancer research, this is the first time it has been adapted to rheumatoid arthritis.
John Isaacs, Professor of Clinical Rheumatology at Newcastle University's Musculoskeletal Research Group, who is leading the team, said that although the work was in a very early, experimental stage it was "hugely exciting".
"Based on previous laboratory research we would expect that this will specifically suppress or down regulate the auto-immune response," he said.
Samples will be taken two weeks after the injection to establish whether it has induced the expected response.
The team also hope to find out if the vaccine is effective only in the joints it is injected into, or whether the new cells spread throughout the body.
Prof Silman said the treatment may prove expensive as each patient would have to have their own cells taken and manipulated rather than a drug which can be made in bulk and prescribed to all people with a condition.
He said it would be unlikely that the vaccine could be offered in normal local hospitals because of the expertise necessary to manipulate the cells in the laboratory.
It raises fears the vaccine would have to go through the National Institute for health and Clinical Excellence cost effectiveness tests.
But if the vaccine did work with a one off injection and completely stop the disease it is likely to offer such a huge benefit to the patient that even a relatively large price may be deemed acceptable. Prof Silman said he expected the jab to cost less than £25,000.
The research is being funded by medical research charity the Arthritis Research Campaign, which is providing £216,000 over 18 months.