Children born as a result of fertility treatment using donated eggs or sperm will in years to come have the right to discover the identity of their genetic parents once they reach 18, the government ruled yesterday.

There are around 37,000 people in Britain born from donated eggs or sperm. Some of them are adults but the majority are still children conceived after the Human Fertilisation and Embryology Act was passed in 1991 and clinics were licensed to carry out fertility treatment.

But the change in the rules, announced yesterday by Melanie Johnson, the public health minister, will not apply retrospectively. Only future children conceived from egg or sperm donations after April 2005 will have the right to find out who their genetic parent was.

But while the long-awaited decision pleased organisations representing donor offspring, fertility doctors warned that it would cut the already inadequate supply of donor sperm and eggs, causing more heartache for infertile couples for whom a donation is the only chance of a family.

Ms Johnson pledged that the government would work to encourage more people to donate, but she said: "The interests of the child are paramount. We live in an age where, as technology continues to develop, our genetic background will become increasingly important.

"I have listened to the views of donor-conceived people and they would like more information about their genetic origins - perhaps for themselves, perhaps for their children, perhaps because they feel the information belongs to them."

Speaking at the annual conference of the Human Fertility and Embryology Authority in London yesterday, Ms Johnson also announced a review of the 1991 act which underpins fertility treatment in this country.

"It continues to provide effective safeguards and quality assurance for research that involves embryos and for the 30,000 patients who undergo fertility treatment in the UK each year," she said. "However, any cutting-edge legislation, no matter how successful, at some stage needs to be reconsidered and any necessary adjustments made to ensure that it continues to be effective."

Some of the most controversial issues, such as embryo research, stem cells and cloning, will not form part of the review because MPs have extensively debated them in recent years. But there will be moves to make it easier for single women and lesbian couples to have babies through fertility treatment. Suzi Leather, chairwoman of the HFEA which regulates the clinics, has said she thinks the clause in the legislation which requires doctors to take into account "the need of the child for a father" should be removed.

Josephine Quintavalle, of Comment on Reproductive Ethics, signalled the battle to come, saying that Ms Leather had shocked the nation.

"In assisted reproduction it is the duty of society to offer ideal family situations to the children who are created, not replicate or legitimise the unfortunate disintegration of society as we find it today," she said. "The role of father is immensely important and cannot be reduced to a one-off donation of sperm."

Reaction to the removal of anonymity from sperm and egg donors was mixed, with dismay from those who fear that many will be put off by the distant prospect of a knock on the door from a stranger carrying their genes, even though donors will have no financial or legal responsibility for the children to whom they help give life.

Alan Pacey, of the British Fertility Society, which represents the clinics, said the news was good for donor children, but they were concerned - as Ms Johnson herself acknowledged was likely - that donor numbers would drop.

"There is a danger that if we cannot recruit donors we may find that many infertile couples will be unable to receive treatment. We are concerned that if this happens, some couples may seek treatment overseas," he said. Overseas clinics are not always as tightly regulated as those in the UK.

The situation was already grave, said the Infertility Network representing childless couples. "There has been a decline in both sperm and egg donors in the UK over recent years and there are areas where the service has been in crisis for some time," said Sheena Young, head of business development.

"Any further drop in the number of donors would be catastrophic for patients. We hope the government will act quickly to ensure that money is made available to put in place an awareness raising campaign to help recruit both sperm and egg donors."

But an umbrella group called Progar, which brings together organisations involved in adoption and representing donor children, warmly welcomed what it described as a "forward-thinking decision" by the government.

"Removing donor anonymity means that donor-conceived people are no longer the only group of people from whom the state withholds biographical information held on official records," said Elizabeth Wincott, Progar's chairwoman. "Increasing numbers of people born by donor-assisted conception have been pressing for a more open and transparent system.

"The task is now to encourage all involved to embrace the regime of openness. Entering into donation or donor assisted treatment should never be done lightly as these are among the most responsible and long reaching actions that anyone can take."

A new climate of openness and honesty about donor insemination is needed, said Olivia Muntuschi of the Donor Conception Network, which supports parents and offspring.

"Donors, people conceived with donor assistance, and their families, need a modern legal framework that respects their rights and responsibilities without resort to the secrecy that donor anonymity has brought," she said.

Main points

· Anonymity will no longer be allowed to donors of eggs or sperm after April 1 2005

· When donor-conceived children reach 18, they will be entitled to know the identity of their genetic parent. The first such requests will not occur before 2023

· Egg and sperm donors will continue to have no legal or financial responsibility for children born from their genetic material

· The government will work to raise awareness of the need for donations and the impact they can have on childless couples' lives

· The HFE Act is to be reviewed, including a consultation in 2005, to take in scientific developments and ethical concerns