Whanganui District Health Board medical officer of health Patrick O'Connor said funding the rotavirus vaccine would prevent about 18 hospital admissions per year in Wanganui.
"This is a strong reason for its introduction."
Dr O'Connor supported funding of the varicella vaccine for children with lowered immunity.
Pharmac's proposal follows calls by the Paediatric Society earlier this year urging the Government to give "urgent priority" to vaccinating all babies against rotavirus.
The society said hospitalisations for infectious diseases rose by 51 per cent in the 20 years to 2008, with the biggest increases in poorer areas where infections spread in overcrowded housing.
Diarrhoea and vomiting caused by stomach and intestine infections (gastroenteritis) was the most common medically preventable cause of acute hospital admissions in Kiwi children, and rotavirus accounted for 42 per cent of gastroenteritis admissions in children under 3 - between 300 and 400 hospital admissions a year.
The World Health Organisation recommended vaccinating all babies against rotavirus in 2009 and Australia has included it in its free immunisation programme since 2007.
Features of the proposals include:
Rotavirus vaccine would be added to the funded list for all eligible patients.
Varicella (chickenpox) vaccine would be funded to protect the most at-risk patients - children with reduced immune systems (for example, because of chemotherapy).
The vaccine would also be funded for people in direct contact with these children.
Public submissions close on November 20. If approved, changes would take effect from July next year.
Meanwhile, health professionals are warning families not to drop their guard against influenza despite a mild winter flu season this year.
Very young children (0-4) and elderly (65+) had the highest flu-associated hospitalisation rates this year, according to research by the Institute of Environmental Science and Research.
The research found that when infants, pre-schoolers and elderly were infected with influenza, they were more likely to develop severe symptoms than other age groups.
- additional reporting, Simon Collins