Researchers at the Hudson Institute of Medical Research said two types of anti-inflammatory drugs already used on children could stop the development of bronchopulmonary dysplasia (BPD) in pre-term babies.
Up to 60 per cent of pre-term babies develop BPD — which causes damage to lung tissue and prevents normal lung growth — because their lungs are exposed to life-saving respiratory support.
Senior researcher Dr Ina Rudloff said it was an "exciting" discovery in treating a disease that in some cases could lead to death if a baby contracted a serious infection in their airway.
"At the moment there is no effective or safe treatment, what we have looked at are two drugs … that are basically able to inhibit the development of BPD," she said.
"We know they are safe, we know that they have been used in other diseases so we expect that through clinical trials it will show both drugs are effective and be used for the treatment of BPD very soon."
Dr Rudloff said the disease could leave babies with a lifetime of health concerns.
"Babies that are affected have a lot of consequences which range from impaired neurodevelopment to the fact that they are very prone to develop infections and and babies that are affected get hospitalised frequently," she said.
"It's a huge burden on the babies and on the families.
"The treatment we are working on and we want to develop would actually give hope to those babies affected and those babies that are born pre-term and have a rough start to life, so we would be able to give them a brighter future."
She said the next step was to conduct clinical trials.
Treatment would have been life changing, mother says
Marlowe was born 13 weeks premature and weighted only 986 grams when she was born.
Her mother, Merryn, from Vermont in Melbourne's east, said Marlowe was on oxygen support for 86 days when she was first born and developed BPD.
Despite this, Marlowe had kept good health and was a happy and healthy two-year-old, her mother said, but on a recent trip to Brisbane she was struck with respiratory syncytial virus (RSV).
"That had her admitted to hospital for eight days. She was on oxygen support and she was close to being admitted to the intensive care unit because she was really suffering from it," Merryn said.
The hospital visit was a setback for the family.
"When she was 14 months we built up the courage and actually went to Vietnam, which was a huge deal, and we felt comfortable flying, we felt comfortable going out of our comfort zone and because she was in such good health she hadn't had any major problems," Merryn said.
"This most recent episode in Brisbane has rattled us because it's reminded us of her prematurity and the fact that she's more fragile."
Merryn said the treatment breakthrough would have been life changing for Marlowe.
"I think that if she had have received this treatment and had have been able to withstand contracting the RSV far better than she did I think that obviously she wouldn't have been put through the trauma of going back to hospital and being put on oxygen and support," she said.
"She was fed through a nasal gastric tube again and she slept for pretty much four days straight. She still talks about the hospital now and it's been several weeks down the track.
"From us, it's really shaken us and now we're really cautious about travelling, about her health and where we were all quite relaxed before, we're quite conservative again."