By Maggie Fox, Health and Science Correspondent

WASHINGTON (Reuters) - Thalidomide, once notorious for causing horrendous birth defects, won approval from the U.S. Food and Drug Administration (FDA) Thursday for use against leprosy.

Made by New Jersey-based Celgene Corp. under the brand name Thalomid, thalidomide is approved for a side-effect of leprosy known as erythema nodosum leprosum (ENL) -- a painful condition that can nearly cripple leprosy victims.

"We think that physicians may use this product off-label for patients with very severe life-threatening conditions in the United States who don’t have access," said Dr. Janet Woodcock, director of the FDA’s Center for Drug Evaluation and Research (CDER).

Doctors are using it experimentally against cancer, autoimmune diseases ranging from lupus to rheumatoid arthritis, symptoms of AIDS and tuberculosis.

Thalidomide was prescribed, mostly in Europe, in the 1950s as a tranquilizer and, ironically, against morning sickness. But it caused severe birth defects in at least 10,000 babies—many of whom grew up and live with disabilities that leave them without arms or legs and often restrict them to wheelchairs.

Shunned for years by all but a few researchers, thalidomide is now showing promise against a range of diseases from leprosy to cancer.

"Because of its well-known potential for causing birth defects, thalidomide will be among the most tightly restricted drugs ever to be marketed in the United States," the FDA said in a statement.

"It is the first time that the FDA has invoked restricted distribution of a drug," Woodcock said in a telephone interview.

"I think it’s important to know that this whole process has been a very open process, and we had consulted with everyone from thalidomide victims to women’s groups to patients."

The FDA and Celgene came up with a program called the System for Thalidomide Education and Prescribing Safety (STEPS). It includes an educational leaflet that includes a plea from victims to be careful, and a videotape.

"Only physicians who are registered in the STEPS program may prescribe thalidomide to patients, and those patients—both female and male—must comply with mandatory contraceptive measures, patient registration and patient surveys," the FDA said.

The FDA said regular pregnancy tests would be required and women would be told to use two reliable methods of contraception during use. Men will be told to use condoms.

Despite its dangers, Celgene sees great potential in thalidomide and is testing it against autoimmune diseases, symptoms of AIDS and tuberculosis.

Rockville-based Entremed has received permission to test it in a few brain cancer patients under the FDA’s orphan drug program.

There were mixed feelings on the approval. AIDS victims have been clamoring for the drug, which can relieve the mouth ulcers that torment AIDS patients and can also help with AIDS-related wasting.

"It’s wonderful that it’s happened," said James Learned, deputy director of the Persons With AIDS Health Group, which once distributed thalidomide bought in Brazil and Mexico.

"Definitely more people will have access (now)." But he stressed that people must be told of the dangers of the drug. "I think we have to continue to educate and talk about it intelligently," he said.

Noting that there is no such thing as a perfectly safe drug—even aspirin kills more than 7,000 people a year—the FDA admits to the danger.