A reduced variety of gut bacteria in newborns at high risk of allergies could determine whether those children develop eczema, a study shows.

In the largest study of its kind, Melbourne researchers investigated 98 babies at high risk of allergic disease.

Of those, almost 34 per cent developed eczema in their first year of life while 24 per cent had a least one positive skin prick allergy test to food or other allergens.

Babies who developed eczema by 12 months had significantly less diversity in their gut bacteria, from as early as seven days of age, compared to those without eczema.

Murdoch Childrens Research Institute lead researcher Associate Professor Mimi Tang said the results suggested that it may be possible to alter gut bacteria to prevent allergies.

"This suggests that altering the mix and amount of bacteria in our guts in early life could be an effective approach to the prevention of eczema, especially for those with an increased risk of developing allergic disease," Assoc Prof Tang said in a statement.

Exposure to a range of common germs in early life could also be an important factor, Assoc Prof Tang said.

Gut bacteria development in babies can be influenced differently by either a vaginal or caesarean section birth, whether they are breastfed or given formula, exposure to antibiotics and contact with parents, siblings and hospital staff.

The research was published in the Pediatric Allergy and Immunology journal.