Create Windows 7 System Repair disk on USB stick

Windows 7 includes an utility to Create a system repair disc that includes Windows Recovery Environment.

The utility can only write to a CD/DVD, so extra steps have to be performed to create an USB stick:

Use the utility to Create a system repair disc and burn it to a CD/DVD
Prepare an USB stick to be bootable:
Insert the USB stick, and let Windows discover the removable disk
Open an Elevated Command Prompt.
Launch the command line disk partitioning utility with this command:

diskpart
List the available disks on the computer:

list disk
Choose the removable USB disk (“?” should be the disk number from the list):

select disk ?
Clean all existing partitions:

clean
Create new partition:

create partition primary
Mark partition as active:

active
Format new partition:

format fs=fat32
Copy the files from the burned CD/DVD to the now prepared USB stick