The positive preclinical results - reported in the journal Diabetes - are further evidence that the research could lead to a new treatment for diabetic nerve damage or 'neuropathy'; initial-stage clinical trials on patients in the United States have also been encouraging.
Lead researcher Professor David Tomlinson says the study has massive potential for managing the condition and preventing thousands of foot amputations each year.
'The vast majority of non-traumatic hand and foot amputations carried out in UK hospitals are caused by diabetes and there are currently no treatments available to prevent or slow the progress of nerve disease in diabetic patients,' he said.
'Our tests have shown that a single injection of a DNA-binding protein protected nerve function, stimulated nerve growth and prevented tissue damage that in humans can lead to limb loss.'
An estimated 50 per cent of patients with long-term diabetes develop some form of neuropathy that can cause numbness and sometimes pain and weakness in the hands, arms, feet and legs. Progression to amputation is not inevitable, but it is always a threat.
Problems may also occur in other organs, including the heart, kidneys, sex organs, eyes and digestive tract.
'Diabetic neuropathy is a major problem in insulin-dependent diabetes, particularly in patients who have had the disease for a period of time,' said Professor Tomlinson, who is based in the University's Faculty of Life Sciences.
'Our approach to gene therapy is quite different to previous attempts at treatment: we use a DNA-binding protein called ZFP TFTM to poke life into the patient's own genes and produce a growth factor that has a role in nerve protection and regeneration.
'As the data in the paper demonstrate, we have had some striking success.'
The US clinical trials - carried out by Professor Tomlinson's collaborators at biotech firm Sangamo BioSciences Inc - have also been encouraging with the only adverse event reported being mild injection-site reaction in four of the 12 diabetic patients tested, all of which resolved quickly.
'We are delighted by the progress of our clinical programme in diabetic neuropathy and by the reception it has received from the medical and scientific community,' said Edward Lanphier, Sangamo's President and CEO.
'We believe our DNA-binding protein may provide a novel and much-needed therapeutic approach to diabetic neuropathy and optimistically look forward to the next stage of development of this novel therapeutic when phase-two clinical trials start later this year.'
The incidence of diabetes, a condition in which the amount of glucose in the blood is too high, is increasing dramatically with the World Health Organisation estimating that some 300 million people worldwide could be affected by 2025.
The causes of diabetic neuropathy are not fully understood but researchers investigating the effect of glucose on nerves believe it is likely to be a combination of factors.