Use of home oxygen therapy for prematurely born infants with chronic lung disease (CLD) can facilitate early discharge, but affected infants might require more readmissions. Our aim was to determine if health care utilisation and associated costs in the first 2 years were greater in centres with a high compared to centres with restricted use of home oxygen therapy. A retrospective review of the hospital and general practitioner (GP) medical records of 235 infants with CLD (median gestational age 27 weeks; range 22–33 weeks) was performed to note their readmissions, outpatient attendances, community service referrals and cost of care in the first 2 years after birth. A total of 76 infants (64%) in the high use centres and 12 (10%) in the restricted use centres were discharged home on oxygen. Infants in the high use centres were discharged home from neonatal care at a younger age (median 37.7 versus 39.9 weeks; P <0.001), but subsequently had similar numbers of inpatient events, and less GP ( P =0.012) and community care ( P <0.001) contacts, although their duration of home oxygen use was longer ( P <0.001). The post-discharge costs were similar in the two types of centre, but the neonatal costs ( P <0.0001) and total cost of care per infant over the first 2 years ( P <0.0001) were lower in the high use centres. Conclusion:early discharge and high use of home oxygen therapy was not associated with an increased cost of care or increased morbidity.