Dr Deborah Lehmann, who leads infectious diseases research at the Telethon Institute for Child Health Research, said the findings show that infection is an increasing concern in affluent countries.
In the biggest study of childhood hospital admissions ever undertaken, the research team analysed the admission records of more than 270 thousand children born in Western Australia between 1990 and 2000.
The results, published in the Pediatric Infectious Disease Journal, found that one in 5 non-Aboriginal children and half the Aboriginal children were hospitalised at least once due to an infection by the time they reached two years of age.
Admissions to hospital with infection are increasing significantly in non-Aboriginal children, as similar studies in the US have also found. While there has been a decline in admissions of Aboriginal children for infections, they are still more than 3 times more likely to get admitted than non-Aboriginal children.
The most common causes of hospital admissions were respiratory infections such as bronchiolitis, pneumonia and otitis media (ear infections) followed by gastroenteritis.
"Infections are not often highlighted as a priority health issue but these findings show very clearly the need for all children to have access to good quality health care before these infections become so serious that they require hospitalisation," Dr Lehmann said.
"It also reinforces the importance of continued vaccine development and implementation, particularly for respiratory syncytial virus (RSV), rotavirus and influenza."
Study co-author Dr David Burgner, specialist in infectious diseases at the School of Paediatrics and Child Health at the University of Western Australia, said the research team had discussed a number of possible reasons for the high rate of hospitalisation.
"These days young children generally mix with many children at a young age due to an increase in day care and other organized activities for children -- therefore they are also potentially exposed to more infectious diseases, earlier."
"We also think that the reduction in bulk billing practices has seen more children treated at emergency rooms, which may increase the likelihood of admission into hospital.
"Now we can diagnose illnesses such as bronchiolitis more readily than previously. These are children that might have previously been labelled as having asthma, rather than bronchiolitis - a viral infection," Dr Burgner said.
"We need to understand why some children develop more severe infections and are admitted to hospital and why these admissions are rising in non-Aboriginal children. This would allow us to develop prevention programs and better treatments to those at greatest risk".
The research team said the high rate of infections in Aboriginal children was of great concern.
"Aboriginal children are at high risk of multiple admissions and dying in hospital," Dr Lehmann said.
"Not only do hospitals need appropriate strategies to manage this high risk group once admitted, but we also need to acknowledge and act on the serious economic disparity, living conditions and primary care.
The research was undertaken by Kylie Carville, Deborah Lehmann, Gillian Hall, Hannah Moore, Peter Richmond, Nicholas de Klerk and David Burgner.