A baby born 10 weeks prematurely needs constant monitoring
Premature births cost the UK an extra £939m a year, say researchers at the Oxford Centre for Health Economics.
Their study calculated what the costs would be for all the preterm babies born in 2006 over the first 18 years of their life.
They looked at healthcare, education and the costs to their parents of having to have more time off work.
And they say that more funding for research into ways to delay premature births could save £260m a year.
The baby charity, Tommy's, which funded the research, says this is the first study to look at the total cost to the public purse.
Jane Brewin, Tommy's chief executive said: "Given that the UK rate of premature birth is rising, this mammoth cost is set to grow even larger."
She said better neonatal care had improved the likelihood of these babies surviving but they still faced considerable difficulties.
"We know that there are serious implications for some of these babies such as chronic lung disease, haemorrhaging in the brain, eye problems, digestive tract problems and increased risk of infection."
The study, published in the US journal, Pediatrics, shows the researchers assigned a probability and cost to possible outcomes including the need for neonatal care, mild disability, moderate disability, severe disability and death.
They calculated that 66.4% of the total cost is incurred by those born only moderately prematurely between 33-36 weeks.
And almost all the extra costs come from when premature babies are in hospital just after birth.
A similar study in the US produced very similar results.
Cost of premature birth to the UK is £939m per year
Cost of average preterm baby is one and a half times more than a baby born full term
Delaying all premature births by just one week could save £260m per year
Professor Peter Brocklehurst, director of the National Perinatal Epidemiology Unit at Oxford University, said: "The extent to which the costs associated with preterm birth are an economic burden has previously received little attention.
"We propose that more effort is focused on preventing preterm birth."
Tommy's is funding three medical research centres that are investigating the cause of premature birth, miscarriage and stillbirth.
Jane Brewin said: "The vital work that Tommy's is funding searches for proteins circulating in the mother's blood in early pregnancy which will highlight which women will develop pre-eclampsia.
"This will then enable early treatment to prolong the pregnancy and improve the chances for mother and baby.
"We are also detailing the events which control uterine contractions so we could intervene to stop them in pre-term labour.
"Current treatments are ineffective at delaying labour by more than a couple of days, however we believe if we could improve that to a week it may make a significant difference to the health of the baby."
Andy Cole, of the special care baby charity, Bliss, said: "There are many reasons why children need help and support in their early years and to suggest that premature babies are a financial burden on society is entirely unjustified.
"We cannot and should not judge a life by an economic metric.
"It is important to remember that premature babies, like all babies, are individuals and will be loved and valued by their families."
A Department of Health spokesperson said: "We have established a taskforce, chaired by Professor Sir Bruce Keogh, to support the NHS to identify and deliver real improvements to neonatal services.
"The government recognises the importance of gaining improved understanding and prevention of the trigger factors that are associated with preterm birth.
"The department is undertaking work that will help us identify gaps in research and highlight areas where further research is required."