Olivia Templar smiles and chuckles like any other four-month-old baby. No one would know that she's a medical miracle who dodged serious brain damage after her traumatic birth by having her brain frozen, using a procedure that was initially developed in New Zealand.

After her birth Olivia was starved of oxygen for 10 minutes, which could have caused brain damage or cerebral palsy. But by using a pioneering medical procedure invented at National Women's Hospital in Auckland, Olivia was the first baby in Britain to be fitted with a cap attached to a cooling machine, and her brain was frozen for three days to stop brain damage.

The special 'cooling cap' was developed by medical research scientist Dr Peter Gluckman of the University of Auckland. It can save the lives of about eight per cent of brain-damaged babies and prevent cerebral palsy and other disabilities in another eight per cent.

Dr Carl Kuschel, the clinical director of NICU at National Women's Hospital, says the cap was developed there under Professor Gluckman, and will soon be used in New Zealand. Tests have shown Olivia is clear from brain damage, much to her parents' relief.

'We are just so grateful to the doctors for saving Olivia from brain damage,' says her mother Nichola, 31.

'If her brain hadn't been kept "on ice" I dread to think what would have happened. Olivia is a normal, happy little healthy girl now, and it's because of the treatment. It feels like a miracle.'

Professor Marianne Thoresen, the consultant paediatrician who treated Olivia, says, 'It is still early but Olivia is doing really well and it looks like she will be fine.

'The cap reduces the chances of developing cerebral palsy in babies who have a 60 to 70 per cent chance of suffering brain damage or death after birth. 'The cap works by cooling the brain and reducing swelling after a traumatic birth.'

Nichola, who is married to accountant Daryl, 32, was induced when she was 40 weeks pregnant after being diagnosed with gestational diabetes at 20 weeks. Her doctors didn't want the baby to grow too large. But five hours into her labour, baby Olivia became stuck in the birth canal and doctors had to use a ventouse suction device to deliver her. She had been starved of oxygen for 10 minutes while doctors fought to deliver her and had to be resuscitated. The couple, who have a three-year-old son Rio, were told it was likely that Olivia could be brain damaged as a result of the traumatic birth.

'It was just a nightmare,' says Nichola. 'We didn't know what was happening. The room was filled with doctors and nurses trying to get my baby out.'

'I was in agony and when she was delivered, there was no sound from her at all. It was terrifying. My heart just sank when they told me she had been starved of oxygen. I knew what that meant. When they confirmed that she could be brain damaged it was just devastating. Both Daryl and I were in shock.'

It was a trial for the couple, who had already had to go through their son Rio being born prematurely at 29 weeks.

'I couldn't believe that we had been through all that with Rio being born so early. But he had always breathed on his own and never had to be resuscitated, whereas Olivia had to be. It was terrifying, to go through not knowing whether one baby and then the next would survive.'

Then doctors told the couple about a new machine which would effectively freeze Olivia's brain and reduced the swelling caused by the birth.She had suffered a significant blow to her head during the delivery, and the cooling cap was the only chance they had of stopping brain damage.

Olivia, who weighed 4.2kg at birth, was taken to intensive care and fitted with the special cooling helmet device. The cap is linked to a machine that pumps refrigerated water or coolant to the plastic cap which cools the baby's head.

Some hospitals use cooling blankets but experts believe the cap may be slightly more effective because it protects the outer layer of the brain.

'I had never heard of such a device and it sounded terrifying that her brain was going to be frozen like this,' Nichola says. 'I was worried that her brain would get too cold, but I knew that it was her only chance of being able to live a normal life without brain damage.

'We just had to trust the doctors and hope that Olivia would recover. To see her covered in wires and tubes was awful. We couldn't give her a cuddle while she was hooked up to the machine, but we knew she was in the best possible hands.'Olivia was sedated for three days while wearing the special cooling helmet. Then it was removed and several days later she was given an MRI scan. Doctors told the delighted couple that Oliva's brain function was normal.

'It was a nerve-wracking wait to see if the cooling cap had worked and our baby was saved from brain damage,' Nichola says.

'When they told us the scans were clear, Daryl and I just collapsed, crying with relief.

It was so emotional, I couldn't thank the doctors enough for what they had done.'

The family is now raising funds to try to help the hospital buy more cooling devices to help other babies.