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GASTRIC banding is the cheapest, as well as the most effective, treatment for diabetes in obese people, Australian research has found. But experts have warned that people should not leap into surgery without considering possible side effects.

The researchers compared gastric banding with conventional therapy, and found the stomach-shrinking surgery was four times as expensive over the first two years. But over the rest of their lifetime, patients who had surgery would spend much more time in remission, leading to an extra year of life and saving $2400 in medical expenses.

"This is extraordinary — an operation that saves lives, puts diabetics into remission for many years, increases the length and quality of their lives and … saves us money," said Professor John Dixon, senior researcher at Melbourne's Baker IDI Heart & Diabetes Institute, and co-author of the research published in the DiabetesCare journal.

The research followed 60 obese patients with early type 2 diabetes, and split them between groups who received surgery and who received the best quality non-surgical care.

For the first two years, the surgical-therapy patients had $13,400 in medical expenses, while conventional therapy cost $3400. The researchers then estimated costs over the rest of the patients' lifetimes.

Surgical-therapy patients would spend 11.4 years in remission, compared with 2.1 years for conventional-therapy patients. They would live 15.7 years, compared with 14.5 years.

And the lifetime costs of their treatment would total $98,900, compared with $101,400.

Professor Dixon said the advantages were probably underestimated, because they didn't take into account other lifestyle improvements from the gastric banding weight loss.

But he conceded there was a down side. "We aren't suggesting a lap band is problem-free," he said. "Not everyone will have a great result."

His research was partly funded by a gastric band manufacturer, for whom he also works as a part-time consultant.

An obesity expert warned that gastric banding should only be considered as a last resort for the morbidly obese.

"There are still side effects and complications," said Dr Leon Massage, medical director of the Body Metabolism Institute. Some gastric bands can damage the abdomen wall or cause infection. In very rare cases they have caused death.

"There are people who require (gastric band surgery) once they have tried everything, but they should be aware it is not a silver bullet that will fix them overnight," Dr Massage said.