Many children admitted to hospital can stay for 24 hours or less. Short stay facilities offer such children rapid stabilisation and early discharge with considerable financial saving. A 12 month study was completed in which data were collected from the children's emergency annex (CEA) at Westmead Hospital in Sydney's western suburbs. This university based teaching hospital provides care for a large paediatric population as well as three other district hospitals with limited children's bed capacity. From April 1994 to April 1995, 1300 children were admitted and entered into a database of general and hospital-specific information. Critical incident monitoring was undertaken and follow up with review within 24-72 hours for all children. The CEA increased hospital efficiency significantly by reducing bed days, with a saving of over $500,000 to the department. The average length of stay was 17.5 hours, and 58% of users were children of 2 years and under. Only 3% remained beyond 24 hours, and another 4% were admitted to inpatient beds for continued management of the primarily diagnosed condition. No critical incident was reported during this 12 month period. Short stay facilities are efficient and cost-effective for children with acute illness who can be rapidly stabilised with early discharge without critical incident. Children 12 months and under are particularly suited to this type of facility. Short stay facilities should be used to augment efficiency within children's emergency services which have high turnover and limited bed capacity.