The treatment uses a probiotic called lactobacillus rhamnosus, which contains a peanut protein.
Ten-year-old Olivia May suffered a reaction when she tried to eat a peanut butter sandwich seven years ago.
Additionally, the initial study found 82 percent of allergic children could tolerate nuts two weeks after starting the probiotic and peanut oral immunotherapy treatment.
The researchers said the Murdoch study provides the "strongest evidence yet that a cure may be possible for peanut allergy".
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The lead researcher, Professor Mimi Tang of Murdoch Childrens Research Institute in Melbourne, said that half of the children were consuming peanuts regularly while others were only eating them infrequently.
Peanut allergies are among the most common causes of anaphylaxis, a life-threatening allergic reaction that can often result in death.
Instead of avoiding the allergen, the treatment is created to reprogram the immune system response to peanuts and over the longer term develop tolerance.
The research, published Wednesday in medical journal The Lancet, found that four years on, about 70 percent could still eat peanuts without an adverse reaction.
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Studies have found that around 2 percent of Australian adults and 5 percent of children have allergies to at least one food with an allergy to peanuts being the most common.
The anti-inflammatory properties of those omega 3s is likely to thank for that allergy relief.The downside is that it takes quite a bit of omega 3 fatty acids to see even minimal benefit says Neil L. Kao, M.D., an allergist and clinical immunologist in practice in South Carolina.However, in cultures where people eat more fish and less meat all throughout their lives, overall asthma and allergy responses are less frequent, says Bielory.
ABC reports 10-year-old Olivia May was one of the children taking part in the study, with her mum Tanya explaining how there's no longer the anxiety or worry of her daughter suffering from an allergic reaction.
It is thought the treatment helps to give the immune system a much needed nudge.
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"This is a major step forward in identifying an effective treatment to address the food allergy problem in Western societies", Tang said.