Research has showed that vitamin B3, also known as niacin, can cure molecular deficiencies that stop embryos and babies' organs from developing correctly in the womb.
The breakthrough has been described as "one of the most significant discoveries in pregnancy research", as the findings will transform the way expectant mothers are cared for.
Sally Dunwoodie, a biomedical researcher at the Victor Chang Cardiac Research Institute in Sydney, said: "The ramifications are likely to be huge.
"This has the potential to significantly reduce the number of miscarriages and birth defects around the world, and I do not use these words lightly."
One in four pregnant women currently suffer from a miscarriage, and an estimated 7.9 million babies worldwide are born with a serious birth defect every year.
Annually, 3.3 million children aged under five die from a serious birth defect - and congenital heart disease, its most common form, affects one in 100 babies.
Vitamin B3 is found in meat and vegetables, and tests showed introducing the supplement into the diet of pregnant mice "completely prevented" both miscarriages and defects - leading to all offspring being born "perfectly healthy".
The researchers say their next step is to develop a test to help identify which women are most at risk from having a baby with a birth defect, and to then ensure they have sufficient vitamin B3.
Professor Robert Graham, the institute's executive director, said: "We believe that this breakthrough will be one of Australia's greatest medical discoveries.
"It's extremely rare to discover the problem and provide a preventive solution at the same time. It's actually a double breakthrough."