The discovery suggests it may be possible to grow new reproductive cells from stem cells, allowing infertile men who cannot make any of their own to have children.
But other scientists said they had failed to see enough evidence that fully developed sperm had been created.
Nayernia said: "This is an important development as it will allow researchers to study in detail how sperm forms and lead to a better understanding of infertility in men -- why it happens and what is causing it.
"This understanding could help us develop new ways to help couples suffering infertility so they can have a child which is genetically their own," he wrote in the journal Stem Cells and Development.
He admitted though that the research was at a very early stage and his team needed at least five years to improve the techniques.
He said more investigation was needed to decide whether the so-called in-vitro derived (IVD) sperm, could be used as a fertility treatment, for example for boys who became infertile after receiving chemotherapy for cancer.
However, any use of the lab-grown sperm infertility treatments would raise legal issues in many countries -- the practice is currently banned in Britain.
Doctor Allen Pacey, senior lecturer in andrology at the University of Sheffield in northern England said he was unconvinced by a video of the lab-grown sperm released by the researchers.
"I have looked down the microscope at sperm for the last 20 years every day... and they move with a specific manner of motion, the tail moves in a certain way, the head moves in a certain way and I would like to see at least those details in high resolution in order to convince myself that perhaps we do have sperm here," he told BBC radio.
Another expert, Professor Robin Lovell Badge, from the MRC National Institute for Medical Research, said the work was a follow-up to animal research in which laboratory-made mouse sperm was used to produce offspring.
All the mice born died after a few months, suggesting a defect with the sperm, he said, adding that he too needed to see more robust evidence from the Newcastle team.
"Although they find that some of the sperm cells have tails and can swim, this is not evidence of normality," he added.
The research also suggested it was impossible to create synthetic sperm from female stem cells.
The researchers began with stem cell lines derived from human embryos donated following IVF treatment.
The stem cells had been removed when the embryo was a few days old and were then placed in a chemical solution to encourage them to develop.
They were marked, enabling the scientists to separate so-called "germline" stem cells from which eggs and sperm are developed.
The male, XY stem cells were then prompted to complete meiosis, or cell division, which produced "fully mature, functional sperm."
The scientists attempted to develop cells with XX chromosomes (female) in the same way but they did not progress beyond early stage sperm, called spermatagonia.
The research also raises ethical concerns.
Josephine Quintavalle from the London-based Comment on Reproductive Ethics (Corethics) said: "Our moral objection is that it is an absurdity that to get an embryo they take an embryo and destroy it to potentially create another.
"The intrinsic status of a human embryo should be the same whether it is wanted or not wanted.
"There are many other ways we can study sperm development than this, but they are giving out a picture that this is the only way to do it."
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