A breakthrough in the treatment of childhood peanut allergy has provided hope of a possible cure.

A small clinical trial conducted at the Murdoch Children's Research Institute resulted in two-thirds of the children being treated with an experimental immunotherapy treatment being rid of their allergy.

Importantly, their tolerance to peanuts persisted for up to four years after treatment.

"These children had been eating peanut freely in their diet without having to follow any particular program of peanut intake in the years after treatment was completed," trial lead Professor Mimi Tang said on Thursday.

Plans are now underway by a biotech firm to accelerate the development of this "potential cure" so it can be widely available for doctors to prescribe.

"For the first time, we could have products on the market that provide meaningful and long lasting treatment benefits, which allow sufferers to eat peanut products without thinking about it, as part of a regular diet," said ProTA Therapeutics CEO, Dr Suzanne Lipe.

Immunologist and allergist Professor Tang pioneered a new form of treatment that combines a probiotic with peanut oral immunotherapy, known as PPOIT.

Instead of avoiding peanuts, the treatment is designed to reset the way the immune system responds to peanuts so it no longer produces an allergic reaction.

The probiotic contains properties that shift the balance of immune cells, giving the immune system the "nudge" it needs, Prof Tang said.

A total of 48 children were enrolled in the PPOIT trial and were randomly given either a combination of a probiotic found in yoghurt, Lactobacillus rhamnosus, together with peanut protein in increasing amounts, or a placebo, once daily for 18 months.

At the end of the first stage of the trial in 2013, 82 per cent of children who received the probiotic and peanut oral immunotherapy treatment were deemed tolerant to peanuts compared with just four per cent in the placebo group.

Australian researchers say they may have found a way to cure peanut allergies. (File/AAP)

Four years later, the majority who gained initial tolerance were still eating peanut as part of their normal diet while 70 per cent passed a further challenge test to confirm long-term tolerance to peanut.

Prof Tang said the results were very exciting and had been life-changing for the children.

"We had children who came into the study allergic to peanuts, having to avoid peanuts in their diet, being very vigilant around that, carrying a lot of anxiety," she said.

"At the end of treatment, and even four years later, many of these children who had benefited from our probiotic peanut therapy could now live like a child who didn't have peanut allergy."

The results are published in The Lancet Child & Adolescent Health.

Plans are now underway to get approval for a Phase III clinical trial.

If the findings are confirmed, the broader hope is that the treatment can impact more food allergies among children.