Experts at the Medicines and Healthcare products Regulatory Agency (MHRA) warned that a number of premature babies have suffered burns and other serious side effects after being disinfected with the chlorhexidine antiseptic.
It may have even contributed to the deaths of three babies, officials said. Medics have told to use the solution with care after experts noticed a pattern of burns.
Twenty eight newborns in the UK have suffered "serious side effects" after being wiped down with the antiseptic before a catheter was inserted, estimates suggest.
These side effects included chemical burns, which caused skin loss in some cases, or a skin condition called erythema.
Of the 29 cases, four of the babies died including three in the UK and one in the United States.
One baby died in the UK in 2005 and while the cause of death given was kidney failure, chlorhexidine is thought to be a possible contributing factor in the case.
A further two children died in 2010. In both cases chlorhexidine is thought to be a possible contributing factor, a MHRA spokesman said. Dr Martin Ward-Platt, a spokesman for the Royal College of Paediatrics, said: "Nobody's baby should come to harm because of this."