The babies can have smaller airways, meaning they cannot breathe as easily, because their airflow is about 25% lower, an effect evident up to 18 months of age.
The British Thoracic Society is now calling for the government to put more effort into helping pregnant women to quit.
It has written to Health Minister Yvette Cooper calling on her to form a "think-tank" to co-ordinate efforts to get the no-smoking message across to pregnant women.
Researchers from the Institute of Child Health, in London and Boston USA, studied 355 women.
The results are being presented at the winter meeting of the BTS in London on Wednesday.
They also found body weight and length were "significantly lower" in infants whose mothers had smoked while they were pregnant.
No 'finger-wagging'
Dr John Harvey, chairman of the external relations committee of the BTS, warned pregnant smokers could not simply be condemned and warned against "finger-wagging".
"The message here is stark - smoking during pregnancy has very damaging effects on the lung health of children," he said.
"Health professionals must give their fullest support to pregnant women who want to quit.
"Smoking is mentally and physically addictive - and smokers need all the support they can get in kicking the habit."
Smoking in pregnancy has been found to be bad for the mother and child.
There is evidence it is linked to a range of problems including cot death, miscarriage and chest problems during the first few months of life
The mother is more likely to vomit, have urinary infections and feel unwell if she smokes when pregnant.
Dr Carol Dezateux, a paediatric epidemiologist at the Institute of Child Health and a BTS member, led the research.
She said: "This is the clearest evidence to date that maternal smoking is associated with a marked reduction in the airway function of babies and young children."