The study by the Food Standards Agency (FSA) marks an attempt by the regulator to cater for an ethnic dish, rather than fight the demand with law.
The FSA intends to use the study to bolster its case before the European Commission if it decides to push for legalisation of the meat.
If smokie production is legalised, processors would be able to cater for a new market.
Smokies are considered to be a delicacy among many of those with African or Asian heritage.
Earlier this year the FSA reported that its investigations had found that smokies could be made hygienically under controlled plant procedures.
At the time the FSA warned that it would continue to ban the practice until its analysis of ways to produce the meat safely is completed.
Data gathered from the new study will help the FSA to assess the effectiveness of veterinary medicine withdrawal periods for skin-on sheep, the regulator stated.
The set withdrawal periods would ensure that any medicine residues are below a 'safe' limit to protect the consumer, the FSA stated.
Previous research commissioned by the FSA in 2005 concluded that insufficient data existed for certain medicines to assess the safety of the end skin-on meat product.
The new study will attempt to provide fuller data as required.
"The new research will go some way to help define the requirements for possible future production and consumption in the UK, should the meat be legalised," the FSA stated.
Currently withdrawal periods could ensure residues are below a 'safe' limit, but the existing calculations may have been made based on skinned, and therefore, legal sheep, the previous research stated.
The study will focus on the production of sheep feet with the skin-on, that have been scalded and depilated.
Sheep feet cooked in this way are legally available for human consumption in the UK.
The research also builds on existing research commissioned by the FSA in 2003 into 'skin-on' sheep carcasses, and which found that the meat could be produced safely and hygienically under controlled conditions.
Smokie production is banned in the EU.
The FSA said it was still too soon to say when it would be in a position to approach the Commission to suggest a change in the current law.
"In the short term there is no prospect of the law being changed to allow approved slaughterhouses to produce skin-on sheep," the FSA stated.
"Consequently, the production of smokies in the UK remains unlawful."
The study is likely to start in April 2008 and may take 12-18 months to complete, the FSA stated.
Demand for the 'skin-on' sheep, which has a golden appearance and a strong smokey taste, is rising in the UK and the potential health risks associated with the practice have not diminished its popularity.
According to the FSA the meat is currently produced in unlicensed premises with no Transmissable Spongiform Encephalopathy (TSE) controls in place or official supervision.
Indeed, some reports suggest that demand is so high that meat, smuggled into the UK from Africa, can change hands for up to ten times the its normal price.
The agency said that smokies may pose a significant risk to human health because the method in which animals are slaughtered could cause contamination by faecal material, resulting in the presence of harmful bacteria such as E.coli and salmonella.
Furthermore, there are also concerns about the health hazards of consuming residues from veterinary medicines applied to the skin and fleece, which may not have been washed.
The practice, often done by farmers in a shed, is illegal because there is no official supervision of the production, breaking food safety laws.
The popular west African delicacy is prepared by blowtorching a sheep carcass while the skin and fleece remain attached.
The method gives the meat a golden appearance and a strong smokey taste.