Dr John Wentworth, researcher said: “We had people who were feeling better, moving better and who were happier because of the surgery.
“Their diabetes was better controlled and they needed fewer diabetic medications to control their blood sugar levels.”
He said few experienced negative side effects from the surgery and the improvement in quality of life made it cost effective.
He urged guidelines should be revised so it can be offered to those currently not eligible for the surgery.
Type 2 diabetes occurs when the body does not produce enough insulin or the insulin produced does not work properly and can be linked to lifestyle factors such as being overweight.
Figures suggest nine in ten people with type 2 diabetes are overweight or obese and require medication to control blood glucose levels.
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Researchers from Monash’s Centre for Obesity Research and Education randomly assigned 22 to receive gastric banding combined with medical care, and 23 who received medical care alone.
Both groups received help with lifestyle factors such as exercise and healthy eating.
It found the average weight loss of 12.2 per cent of body weight in the gastric band group compared with 1.8 per cent in the other group.
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He said: “It’s an important point because lap banding is criticised by some people saying it is far too drastic to be used as a diabetes treatment and that it doesn’t work in the longer term.
“I think it’s a matter of just looking at the best ways of managing diabetes and preventing diabetes complications.
“We’re interested in making life easier for these people and reducing the risk of the main complications, mainly heart attack, kidney failure, blindness and amputation.
“Although we’d be delighted if people could lose over 10 per cent of their weight through lifestyle modification, the reality is that the vast majority of people can’t manage that.”
The study was published in Diabetes Care.