Scientists have devised a probe which can warn if a baby is being deprived of oxygen during birth.
Cooling caps are used to minimise brain damage
It checks for high levels of a chemical called hypoxanthine.
The University of Warwick researchers hope it could reduce Caesareans, as doctors currently opt for the operation if there is any doubt at all.
Experts said such a test could have huge benefits - but warned much more work was needed before the Warwick probe could be used in hospitals.
Current tests for foetal hypoxia - oxygen deprivation - are unreliable and many experts feel they are not specific enough.
Not only does this mean that any baby thought to be at any risk is delivered by Caesarean - potentially unecessarily - but they are also given head cooling treatment, which has been shown to minimise the risk of damage from oxygen deprivation.
Experts are looking for better ways of targeting the treatment.
Professor Nick Dale, the neuroscientist who has led the Warwick research, looked at levels of a chemical in the blood called hypoxanthine.
It has been known for some time that high levels indicate a high risk of a child being starved of oxygen - with a measure of more than five micromoles of the chemical per litre of blood indicating a severe risk.
But the challenge is to develop a quick and easy test which can be used on the ward.
Professor Dale has developed a probe with a biosensor for the chemical which tests drops of blood taken from the baby's scalp while it is still in the womb.
The sensor contains an enzyme which metabolises hypoxanthine - indicating how much is in the baby's blood.
More laboratory work needs to be carried out. But Professor Dale said: "We hope to begin human trials in a couple of years."
A University of Warwick spokesman added: "This test would allow doctors to take a more informed decision as to whether to proceed to a Caesarean, and probably therefore reduce the number of Caesareans conducted.
"Another advantage is that Professor Dale's test also requires much less fine-tuning that current tests."
Professor James Walker, of the Department of Obstetrics and Gynaecology at St James' Hospital, Leeds, said: "This sort of work is the Holy Grail of perinatal medicine.
"We want to try and find something that tells us if the baby is at risk of brain damage, which affects under one in 1,000 babies.
But Charles Rodeck, professor of foetal medicine at University College London Hospital, warned: "This is very early research. This probe would need to be used in clinical trials on a large scale before it could be used widely."
A company, Sarissa Biomedical Ltd, has now been formed to carry out further work with the sensor and is in talks with the makers of medical instruments.