The team, led by researchers at Melbourne's Monash University, reprogrammed skin cells into a 3D cellular structure similar to human blastocysts.
The structures, known as iBlastoids, will be used to model the biology of early human embryos in laboratory settings and underpin research on early miscarriages and IVF.
Previously, studies of early human development and infertility were restricted by the need to source scarcely available blastocysts from IVF procedures.
"iBlastoids will allow scientists to study the very early steps in human development and some of the causes of infertility, congenital diseases and the impact of toxins and viruses on early embryos," research team leader Professor Jose Polo said.
It will accelerate the understanding and development of new therapies, he said.
However, the discovery could raise questions about what it means to be human and if iBlastoids can even be considered "human".
The Royal Institution of Australia, a scientific non-for-profit that publishes Cosmos magazine, said it could also prompt a review of regulations governing stem cell and cloning applications.
"It needs to be understood that the Monash team has followed the existing rules concerning stem cell and embryonic research to the letter," editor-in-chief Ian Connellan said in a statement.
"It's just that they've found a new way to create what is effectively an embryonic structure, without the traditional sperm-egg model.
"That, in itself, is quite amazing and opens up significant avenues of research... as well as forcing a review of how current rules are applied."
The research, published in UK scientific journal Nature on Wednesday, details how scientists used "nuclear reprogramming" to generate iBlastoids.
The technique involves placing human skin cells on a "3D jelly" scaffold, re-organising them into blastocyst-like structures. iBlastoids are not completely identical to blastocysts and have limited ability to develop beyond the first few days.
Prof Polo said they will provide a model system to study the early stages of pregnancy. Some women are unaware of conception before an embryo fails to implant or progress.
In addition, Professor Ross Coppel said the discovery will allow the development of improved IVF methods, embryo gene therapy protocols and screening methods for new drugs.
"With further research and the right resources, this discovery could open up entirely new industries for Australia and internationally," said Prof Coppel, deputy dean of Monash University's medicine research faculty.