The Master of the Rotunda Hospital has said overcrowding contributed to the death of one premature baby and the infection of two others with meningitis in the hospital's neonatal unit earlier this year.
Professor Fergal Malone warned that if overcrowding continues its only a matter of time before more babies will get "injured" because more infectious outbreaks will occur.
He said that incubators in the neonatal intensive care unit (NICU) are currently kept less than a metre apart when they should be kept at least three metres apart to prevent infection.
Prof Malone said it is impossible to prevent infection when incubators are "squeezed together".
His comments come ahead of an event at the hospital to celebrate World Prematurity Day, which celebrates premature infants born at the hospital.
According to the HSE, around 4,500 babies are born prematurely in Ireland every year. A premature baby is one born before 37 week’s gestation.
In its annual report, the hospital reported that the corrected perinatal mortality rate is at an all-time low at three per 1,000, down by 40% from 4.8 in 2015.
Prof Malone said around €49 million is required to extend the current NICU and that money needs to come from the Department of Health's capital fund.
He said the Rotunda is 275 years old, the oldest operating hospital in the world and the busiest in Ireland but that it is "not suitable for delivering 21st century care".
He also said that plans to co-locate the hospital at Connolly Hospital will take ten to 15 years to achieve during which time, 90,000 women will need to be cared for.
The Department of Health said Minister Simon Harris is fully aware of the concerns raised about the Rotunda Hospital.
It says the minister met with the Master of the Hospital and asked that further consideration be given to the scope of the works necessary having regards to the plans to redevelop the Rotunda at Connolly Hospital.
The department said it is awaiting a revised proposal from the HSE and Prof Malone.