A new study suggests walking an extra three kilometres every day may reduce the average time Australians aged over 55 spend in hospital each year.

Older Australians can reduce their time spent in hospital by walking an extra 4300 steps or three kilometres per day, according to research published in the Medical Journal of Australia.

A University of Newcastle study found for every 1000 extra daily steps taken the number of days required in hospital per year dropped by nine per cent.

Dr Ben Ewald and colleagues at the University's Centre of Clinical Epidemiology and Biostatistics showed by increasing steps from 4500 to 8800 daily steps Australians aged over 55 spent, on average, 0.36 fewer days in hospital each year.

This equates to a financial saving of around $550 per person per year, the authors say.

"These steps can be accumulated as many brief activities throughout the day, or as steady walking for about three kilometres," they say.

The more than 2000 participants in the study wore pedometers for one week during 2005-2007. Their hospital data from recruitment to 31 March 2015 were analysed, with a mean follow-up time of 8.2 years.

There was a statistically significant reduction in the number of hospital bed-days associated with higher step counts, especially for those patients with cancer and diabetes but not for cardiovascular disease.

The authors say the study's findings suggest health interventions and urban design features that encourage walking could have a substantial effect on the need for hospital care and should be a feature of health policy.