In the two years following the introduction of the Baby Bonus payment in 2004 and the call from the former treasurer, the birth rate in NSW for women having their third or subsequent child rose significantly across all sectors of society, new research shows.

The greatest increase in the rate was among well-off women aged 25 to 29 years living in metropolitan areas.

In a worrying trend, teenagers also showed a greater inclination to breed, the study by researchers at the University of Sydney at Royal North Shore Hospital found.

While birth rates for women of all ages climbed in 2005 and 2006, reversing a decline, the biggest jump was for those aged 15 to 19 years.

It suggests the financial incentive contributed to about 40 extra teenage births a year. "As pregnancy and childbirth in teenagers are associated with adverse perinatal outcomes the increase in births to teenagers after the introduction of the Baby Bonus is of concern," the researchers, led by Samantha Lain, said in The Medical Journal of Australia.

Previously, teenage motherhood had been in steep decline, dropping by an average 125 births a year since 1997.

The Baby Bonus payment of $3000 for the birth of a child was introduced by the Howard government in July 2004.

To determine its impact, the researchers analysed all births to women aged 15 to 44 years in NSW from 1997 to 2006.

Overall, in NSW, an extra 37,000 naturally conceived babies were born in 2005 and 2006 above what would have been expected if the previous declining birth rate had continued.

While other factors may have been at play, it was "unlikely" that a short-term change of such magnitude was not related to the new payment, the researchers concluded.

"Whether it has encouraged couples to increase their family size or just change the timing of birth is yet to be seen."

Sharon Gilbert, who has four children aged 5, 4, 2 and almost one, said her doctor had often joked she was doing her bit for the country, and the Baby Bonus had been a welcome financial boost.

"Obviously it helped," said Mrs Gilbert, 35, who works full-time managing the Fernwood Women's Health Club in Haberfield, and who is expecting her fifth child.

But the policy had played no part in their decision to have a large family. Her motivation has always been to create a close-knit family unit of siblings.

One "startling" direct result of the introduction of the Baby Bonus, the study found, was that women rescheduled their inductions and caesareans from June to July 2004 to get the money. This resulted in the delayed birth of more than 1000 babies, putting "huge pressure" on the NSW health system.

The study found an increase in second births occurred predominantly among younger women of low and average socioeconomic background. For third and subsequent children, the biggest increase in the birth rate - 31 per cent - was among well-off 25- to 29-year-old mothers, while the rate for 20- to 24-year-old women from disadvantaged backgrounds also jumped by 27 per cent.

Contrary to some claims, the increase in teenage births was not limited to girls from lower socioeconomic backgrounds, the researchers said.