However, the technology brings with it a Pandora's box of ethical problems, from accusation of playing God to fears that it could be abused to create a biological weapon.
Six years ago Dr Venter, a 69-year-old Vietnam War veteran and billionaire entrepreneur, made headlines when he announced he had made artificial life for the first time.
To do this, he read the DNA of a bug that infects goats, Mycoplasma mycoides. He then recreated the DNA from fragments of genetic code made from four bottles of chemicals.
This DNA was put into a bacterium from a different species which read the DNA and sprang to life as an artificial bug he named Synthia 1.0.
Dr Venter, who was instrumental in the sequencing of the human genome, has now gone a step further, working out which of the 900-odd genes in Synthia 1.0 are essential for life. This led to the creation of Synthia 3.0, which boasts the 473 genes needed to grow and reproduce.
If life is defined as the ability to grow and breed without help, it makes the bug the simplest living thing.
In theory Synthia 3.0, or a similar skeleton bug, could be accessorised with genes that could revolutionise healthcare and fuel production.
Dr Venter, of the J Craig Venter Institute in California, said some of the possibilities are still beyond the realms of imagination. He also claims it may be possible to use the technique to recreate any living organism.
Asked in the past why he thought he could make a better job of designing life than God, he simply said: "Well, we have computers."
Dr Vitor Pinheiro, a synthetic biologist at University College London, said: "This work is a remarkable tour de force and delivers the simplest free-living organism we know."
Nobel Prize-winning biologist Sir Richard Roberts told the Forbes website: "The goal of completely defining what it means to be considered alive has taken a giant step forward."
Dr Sriram Kosuri, a biotechnologist at the University of California, Los Angeles, called the research "quite amazing" but said it was only "the beginning of a very long road".
The ETC group, a biotechnology watchdog, said the science is outpacing the legislation needed to regulate its use. Dangers include that genes from a designer bug will jump species, creating a plague against which humans have no defences.
Jim Thomas, the ETC's programme director, said: "It's hard to sort out the science from the sophistry in this announcement. Craig Venter is the Donald Trump of the biosciences and no one can ever be quite certain what he is up to."
- Daily Mail