Shrieking gleefully, Sebastian Allan launches himself off the sofa with typical toddler gusto. It is hard to believe he was once a fragile baby whose prospects of survival hung precariously in the balance.

When his mother went into labour only 23 weeks into her pregnancy, her doctors were blunt: a child born now, they said, had barely a 1 per cent chance of living. The hospital managed to delay the birth for a few days with drugs, but Sebastian arrived at 23 weeks and six days - almost four months early - weighing only 1lb 5oz. He was rushed into intensive care and spent two months on a ventilator: it was 139 days before his parents could bring him home.

'You just live in hope, that's all you can do,' recalls his mother, Justina Shelley. 'It's not just taking each day as it comes: it's hour by hour, minute by minute. They can get sick very quickly, and make really quick turnarounds too.'

Two years on, Sebastian has definitively turned around. Babies born at 23 weeks have an 89 per cent chance of some lasting disability, but his only real legacy is moderate hearing loss. He wears a hearing aid and has speech therapy, but his mother says his quality of life is exactly that of his peers: 'What everybody else has got, he's got.' While it was clear sometimes that the treatment he endured was painful, she says, 'I am sure that in his future years he will understand that we let him go through quite an enormous amount of pain to let him have the life he's going to have.'

Sebastian illustrates how the NHS can get it resoundingly right for premature babies. He was found a bed in the intensive care unit of the hospital where his mother gave birth, the Royal Sussex in Brighton - unlike the 1,062 babies who had to be transferred out of their home region last year to find a spare bed, according to the premature baby charity Bliss, some of whom were moved hundreds of miles from home.

His parents are confident doctors assessed Sebastian on his own merits, rather than deciding on the grounds of his precarious age that nature should take its course. 'I don't believe there should be a deadline on anybody's offer of intensive care: babies need to be shown a chance,' says his mother. 'There were babies in hospital born weeks after Seb that were very sick, and did unfortunately die. I really feel passionately that a borderline can't be set.'

Babies born at 23 weeks are now routinely resuscitated in most hospitals, but if Justina had given birth a week earlier things might have been different. While a few clinicians will fight to save a 22-week-old baby, most consider them too small and too likely to suffer from the invasive treatment required to try and revive them: the risk of profound handicap, even if they survive, is also high.

Andrew Lyon, consultant neonatologist at Edinburgh Royal Infirmary and honorary secretary of the British Association of Perinatal Medicine, admits there are times when a baby is revived and it later becomes clear that letting it die would have been kinder. He knows parents who wanted a child resuscitated, but regretted it when they saw it suffering.

Each clinician finds their own line, he argues: 'If you said to people do you resuscitate a baby born at 18 weeks, everybody would say no. But the closer you get to 23 weeks, people have different views. I don't think that's a bad thing either: you don't progress unless you have slightly different views. What we want is good guidance on what are the problems of doing this.'

Faced with what seems like a postcode lottery for premature babies, there is a growing clamour for clearer guidelines on so-called viability - where to draw the line between a baby who deserves every chance to live, and one that compassion dictates deserves a peaceful death.

This debate took a darker turn following last week's revelations about Charlotte Wyatt, the profoundly disabled three-year-old whose parents fought a long legal battle to have her kept alive against clinical advice: they subsequently became estranged, and it emerged last week they can no longer care for her.

Some of the answers may emerge next month, when the Nuffield Council for Bioethics publishes a long-awaited report on fetal and neonatal decisions. Its research has stretched from the Netherlands - which sets a strict limit of 25 weeks on viability - to British special schools, where the panel weighed the arguments over how far disability affects a child's quality of life.

The panel is expected to reject a Dutch-style limit, with hospitals required to let a baby below a certain age to die, arguing that even two infants born at exactly the same age can vary widely. Lyon agrees, arguing that arbitrary judgments would be not only unfair but impractical when, even with ultrasound scanning, doctors can be several days out in pinpointing the length of a pregnancy. 'I don't think we can have absolutes,' he said. 'If you have an absolute gestation, you have to be absolutely certain that you know exactly what the gestation is.'

The shifting sands of viability have now opened a new front in an older argument - the one over abortion. As babies are saved who would once have been stillborn, abortion campaigners are increasingly arguing that the law on terminations should change to match. Abortion is currently legal up to 24 weeks, meaning that, theoretically, a 23-week-old baby may be resuscitated while an older baby's life is being ended in the same hospital.

The argument will be tested in parliament shortly, following moves by a Conservative MP, Nadine Dorries, to reduce the abortion time limit to 21 weeks - below the earliest age at which premature babies now survive. But if society cannot put an arbitrary limit on when life begins, can it so easily decide when life may end?

Dorries is not the obvious figurehead for a campaign regarded by some as the thin end of the wedge that will ultimately end in abolishing abortion outright.

A nurse who has worked on late terminations - a procedure she describes as 'horrific' - she uses the crisp language of feminism rather than the biblical rhetoric of pro-lifers: she supports a woman's right to choose in early pregnancy, speedier access to abortions where necessary and better contraception, including the use of three-year contraceptive implants for young women.

But she is adamant that past 21 weeks, a foetus is simply too human to be terminated: 'There is a stage when a foetus is a foetus: it's a multiplying mass of cells.But there comes a point where that foetus takes on human characteristics and human feelings and human sentience. We know it's fully formed, we know it responds to a mother's voice and to music.'

Her 10-minute rule bill, launched next week, is unlikely to become law but a vote would show, for the first time, where the Commons now stands on late abortion, paving the way for a more serious political assault on the issue next year.

Dorries's approach has, however, split old loyalties within the anti-abortion movement, now divided between pragmatists who believe a reduction in late terminations is at least a start, and those who think she is missing the point. 'An abortion can be wrong at eight weeks if it's being done for social reasons: it's not about viability,' says one leading pro-life campaigner, who wanted to remain anonymous because of the depth of the split in the anti-abortion movement.

The issue is one of perception. While the public may be struck by the issue of increasing viability, the militant pro-life and pro-choice movements unite on one thing; they do not want abortion law dictated by premature babies' viability.

For pro-lifers, it is about a moral belief that all life is sacred from conception; for the pro-choice lobby, it is about not denying options to women who only discover at their 20-week scan that their baby has severe abnormalities, or to teenagers too frightened to come forward early, or to those pushed over the threshold by long waiting lists for NHS terminations.

'Women often get tests at 20 weeks about foetal abnormalities and have to consider whether to continue or not. By reducing to 21 weeks, you are discounting these women,' said a spokeswoman for the Family Planning Association.

And even Dorries' argument is not about viability but sentience - the point at which a baby is capable not of life outside the womb, but of feeling. She will spend part of this week in an operating theatre staffed by abortion providers, and part with Professor Stuart Campbell, whose 3-D ultrasound images of babies in utero smiling and sucking their thumbs polarised the debate.

To pro-lifers, Campbell exposes the truth about what late abortion destroys: but to the pro-choice movement and many clinicians, his images reveal nothing about what the unborn actually feel. Given that newborn babies do not smile to express pleasure until around six weeks, is a smiling foetus experiencing emotion or exercising new muscles?

Campbell also favours an 18-week limit on abortion, well below the age a foetus could survive outside the womb. So if the issues of viability and abortion limits are not apparently inextricably linked, even by those at the heart of the debate, are more complex factors influencing the ethical dilemmas?

It hit the headlines last year. The Royal College of Obstetrics and Gynaecology apparently suggested in a submission to the Nuffield inquiry that very premature babies were 'bedblockers', consuming resources that could be spent on slightly older infants with better prospects.

The issue is, however, more complicated than it seems. At St George's, consultant neonatologist Sandy Calvert argues that the pressing problem is babies of all ages 'blocking' intensive care beds because of staff shortages in the lower dependency units they should graduate to as they recover.

There are three levels of neonatal care: intensive care for seriously ill babies who cannot breathe unaided; high dependency for less severe problems; and special care for babies who are simply underweight or need a little extra help. The worst shortages, according to Calvert, are in special care - which means babies get stuck in incubators they no longer need. Her own ward currently houses twins who are well enough to return to their local hospital, but its special care unit is full, so they are blocking two intensive care beds.

This problem is primarily not about age, but staffing. Last year, according to Bliss, three-quarters of neonatal units closed at least once to new admissions. Even those with theoretically empty beds sometimes simply lacked the nurses needed to use them.

While funding remains finite, demand is rising. The IVF boom means more twin and triplet pregnancies, which are more likely to end in premature births; advances in care mean that babies who would have died are surviving, but require months of intensive care. According to Lyon, obstetricians are also now readier to deliver babies prematurely to protect the life of a mother with a problem pregnancy, knowing the infants have a decent chance.

It might be logical to ask if the NHS can afford to keep reviving younger and younger babies. Lyon, however, argues that 23-week old 'births' are still rare - many die during delivery - so do not overly burden the system. Besides, he argues, for doctors it is not about money: 'If a baby needs care, you find care.'

Nonetheless, the service is at a financial crossroads. Elsewhere in the NHS, the government has introduced payment by results, a funding system involving a fixed tariff being set for every operation or procedure. Hospitals that can do it for less make money, but those with higher costs than the national tariff lose money every time they provide the service. There is no tariff yet for neonatal services, and hospitals are paid between £750 and £1,200 per day for neonatal intensive care. Those paid the least are often left struggling. A tariff is now being negotiated, but the British Association of Perinatal Medicine has been told it will be 'cost-neutral' - meaning there will be no new money, prompting suspicions that the tariff will be set low.

'If it's cost-neutral, it means that the problems we have got now are going to still be there,' says Lyon.

The government did also give an extra £70m for neonatal services last year, but Bliss's research suggests that, because it was not ring-fenced for the service, up to 60 per cent of it went on NHS deficits or other priorities.

Clinicians say underfunding means that not only can most hospitals not afford the one-to-one nursing care for babies which adults or older children in intensive care get, but they sometimes cannot afford enough staff to open all their beds. Which means it may only take one delivery of triplets requiring three beds, or staff off sick, before a unit must shut its doors, prompting a frantic search for wherever there might be a bed.

When Sarah Skates gave birth to twins aged only 26 weeks, she found her new family suddenly torn apart. Kiera and Cameron were too small to be nursed at Queen Mary's hospital in Sidcup, Kent, where she went into labour: the nearest hospital with room for both was the Norwich and Norfolk, 120 miles away. But by the time Kiera had been safely deposited in Norfolk and the team returned for her twin, another sick baby had taken his place: he was found a bed in Surrey instead.

While Sarah's husband, Andy, went to Norfolk to be with their new daughter, she stayed at home visiting their son. It was five days before she even saw her daughter: 'I know I bonded with Cameron a lot more to start with than I did with Kiera. When I went up to see her, I felt guilty I had left Cameron behind.'

During the week, she was alone at home with her eight-year-old daughter and admits times were tough: 'I had to go home at night without the babies, without anybody. I was lucky because I had quite a lot of close family, but most of the time I was crying all night because I wanted to bring them home and there wasn't anybody at home. I was constantly ringing the hospitals to see that they were OK before I could sleep.'

Fortunately, the twins are now 21 months, home and healthy. Cameron has some hearing loss, but their mother was able to bond equally with each once they were both released to the same hospital nearer home. The twins are also close to each other, despite being initially separated.

Their mother is now helping Bliss to campaign for more funding to avoid other families being similarly split up: 'I want all the hospitals to have the capability to take young babies like this - just enough space for them, and enough staff.'

Lyon argues that some transfers will always be necessary to reach specialist care, but thinks babies get a raw deal. 'If paediatric intensive care [for older children] or adults had these issues of transferring people all over the place, there would be screaming.'

There are signs of hope, however. At St George's, 518 admissions may have been rejected last year, but Calvert says it was as high as 700 in the past. Managed clinical networks, in which hospitals in one region work together to try and find beds nearby, have now been introduced. 'It won't stop babies being moved around sometimes, but it should mean they are moved closer to home rather than this random trying to find a bed somewhere,' says Lyon.

Nonetheless, his Edinburgh unit still occasionally sees babies from northern England.

No wonder Justina Shelley is still struck by her good fortune in having Sebastian. 'I am absolutely sure that the decisions that were taken [by his doctors] have given us this child,' she says.

The decisions now being reached about neonatal care, from its ethics to its funding, may help to decide whether future parents can all say the same.

A question of survival

The past
Twenty years ago, only 20 per cent of babies born weighing less than 2lb 2oz would have survived, according to the premature baby charity Bliss . Now 80 per cent do. When the current generation of neonatalogists were training, a 23-week-old baby would be left to die: now it is likely to be resuscitated. When abortion was legalised in 1968, the time limit was 28 weeks: it was reduced to 24 weeks in 1990 partly because of the increased viability of premature babies. In 1969, 5.3 women per 1000 aged between 15 and 44 had a termination.

The present
Babies are being resuscitated younger but the risk of disability is still high: a baby born at 24 weeks and given in tensive care still has an 80 per cent risk of some disability, according to the Trent Neonatal Survey. However, this can be as mild as wearing glasses or having some hearing loss. The abortion rate had tripled by 2003.

The future
The youngest premature baby to survive was aged 22 weeks and born in Canada : but a handful of 22-week-olds are now being successfully resuscitated in the US and more rarely in pioneering British units, raising the possibilty that this could become more routine.