Thousands of people with a devastating eye condition could be offered a potentially sight-saving treatment following a U-turn by the health watchdog.

The National Institute for Health and Clinical Excellence provoked a storm last year when it judged that Lucentis was not cost effective for use in the treatment of diabetic macular oedema (DMO).

The move came as a major blow to around 50,000 people with diabetes in the UK who have the condition.

But the watchdog has reversed its decision and recommends Lucentis - which has already been approved for restricted use in Scotland - in specific circumstances in England, Wales and Northern Ireland.

It will recommend the drug if the manufacturer, Novartis, provides the drug with a discount agreed in a patient access scheme which would bring down the cost of the drug to the NHS.

The drug, also called ranibizumab, is said to be the first licensed treatment to improve vision and quality of life for those with DMO.

It costs £742.17 per injection, excluding VAT, and treatment is given monthly.

DMO occurs when fluid leaks from small blood vessels in the eye.

This gathers in the central part of the retina - the macular area which is responsible for colour vision and perception of fine detail - and can lead to severe sight problems.

Laser treatment has been offered on the NHS but this only prevents further deterioration of vision.

Carole Longson, director of the centre for health technology evaluation at NICE, said fresh analysis showed Lucentis had a “superior relative effect” if a patient’s eye had a central retinal thickness of 400 micrometres or more.

Professor Longson said: “NICE is pleased to recommend ranibizumab as a treatment option for some people with visual impairment caused by diabetic macular oedema in new draft guidance.

“In November 2011, NICE published guidance which did not recommend the drug as an effective use of NHS resources.

“However, following the submission of a revised patient access scheme, we have conducted a rapid review of the original guidance.

“The manufacturer also included updated analyses showing that ranibizumab could be expected to have a superior relative effect among people with central retinal thickness greater than 400 micrometres.”

Registered stakeholders now have the opportunity to appeal against the draft recommendations.

NHS bodies have been advised to make decisions locally on the funding of specific treatments until NICE has issued final guidance which is expected to be published next month.

A spokesman for the Macular Society said: “We are delighted that NICE has approved Lucentis for some diabetic patients.

“We know that many patients have lost their sight or been forced to pay thousands of pounds for private treatment to keep their vision so this is very good news.

“However, we are concerned that ophthalmology clinics are under-resourced to cope with the demand.

“We know from a recent survey that many retinal injection clinics are already failing to meet recommended waiting times for patients with age-related macular degeneration. Now they will have to treat many more patients.

“We urge the government to ensure that these services are properly resourced.”