Birth Injury Claims
Many hospitals do not have the staff or facilities to cope with increasing demand for neonatal intensive care, MPs have warned.
The House of Commons Public Accounts Committee says regional differences in death rates have continued, despite a reorganisation five years ago.
Recruiting and retaining skilled staff remained a "major challenge", it said.
The government's "children's tsar" said funding had increased, and a taskforce set up to improve neonatal care.
The number of babies born needing a cot in a neonatal intensive care unit is rising - figures from 2006/07 suggest that one in ten babies born needs to spend time there.
However, data from across England suggested that mortality rates were higher in some areas than others.
In 2003, the 180 neonatal units in England were organised into 23 "clinical networks", with the aim that every region should have the right mix of specialist care.
The public accounts committee report said that these changes had had only a "limited effect", and called on the government to act.
Edward Leigh MP, the committee's chairman, said: "Constraints in capacity mean the Department of Health is still struggling to meet the demand for neonatal services.
"The serious shortages of neonatal nurses must be addressed, and high occupancy rates in a third of units could have major implications for patient safety, owing to increased risk of infection or inadequate staffing levels."
Tina Pollard, the chairman of the Neonatal Nurses' Association, said that many units still operated with one nurse for every two babies or worse, when best practice suggested that a one-to-one ratio was needed.
"There is research showing that a neonatal nurse in an hour looking after a single baby will spend approximately 56 minutes carrying out necessary tasks, which means that, if she has more than one baby to look after, they are missing out.
"Evidence suggests that this does have an effect on mortality and morbidity."
Dr Sheila Shribman, the government's national clinical director for children, young people and maternity services, said that spending on neonatal services had risen to more than £800m in 2006-7, and that the networks had increased the capacity of units, and reduced the number of babies having to be transferred long distances to find a cot.
She said: "We recognise there is still more to do and we have established a Neonatal Taskforce to support the NHS to identify and deliver real improvements to neonatal services."
Andy Cole, chief executive of the baby charity, Bliss, said: "It is clear that the National Audit Office and the public accounts committee have accurately identified what are the most urgent problems with the services that look after our most vulnerable babies.
"We need to take action now to ensure that babies in intensive care get the one-to-one nursing care they need and deserve."
Dee Cavanagh, now a medical researcher at Irwin Mitchell specialising in birth injury and neonatal claims, previously worked as Sister on a Neonatal Intensive Care unit. Dee commented "I am very concerned about the recent evidence highlighting ongoing concerns about staff shortages within neonatal units. I work closely with a number of parents whose children are profoundly disabled as a result of failings in neonatal care, and unless the issue of under resourcing of neonatal units is addressed, the safety of babies will continue to be put at risk".