Haemorrhagic disease of the newborn is now a rare life threatening disease due to the widespread use of effective prophylaxis with vitamin K at birth. In recent years the continued need for routine prophylaxis has been questioned and alternative strategies proposed. We have reviewed the literature and using techniques of decision analysis, we reaffirm the need for continued prophylaxis. The cost for each life saved by an oral programme is $4500 and $11,000 for intramuscular prophylaxis. The cost to the state of no prophylactic programme is $6.40 per child born and $0.81 for an oral prophylactic programme. It is recommended that the oral route of vitamin K prophylaxis be adopted as it is equally efficacious with the intramuscular route, but cheaper, more consumer acceptable, and has a lower risk of iatrogenic disease.