By measuring the level of glucose consumed by embryos in the first five days, the researchers can determine which are the healthiest and have the best chance of resulting in a successful pregnancy.
The procedure has been tested in 50 patients, with 32 becoming pregnant and 28 babies born as a result.
The research could significantly improve birth rates in IVF and help one in six Australian couples experiencing infertility to become parents.
In the laboratory, fertilised embryos are kept in a glucose solution to mimic the conditions of the uterus to provide nutrients for the embryos to grow.
By measuring the precise amount of the solution each embryo consumes during the four to five days they are left to grow, the Melbourne team has discovered that those taking in the most solution also have the highest chance of resulting in a baby.
The scientists have also discovered that female embryos appear to take up more glucose than male embryos, providing a possible means of determining their sex before they are transferred to hopeful mothers - something that is causing ethical debate in fertility circles.
"This is a very early observation, but it may have the potential to help identify gender at early embryo stage," university's head zoologist, Prof David Gardner said.
The University of Melbourne and Repromed research will be detailed to world experts at the Fertility Society of Australia's annual scientific meeting in Adelaide next week.