There is an urgent public health need to evaluate disease severity in adults hospitalised with Delta and Omicron SARS-CoV-2 variant infections. However, limited data exist assessing severity of disease in adults hospitalised with Omicron SARS-CoV-2 infections, and to what extent patient-factors, including vaccination, age, frailty and pre-existing disease, affect variant-dependent disease severity. A prospective cohort study of adults (≥18 years of age) hospitalised with acute lower respiratory tract disease at acute care hospitals in Bristol, UK conducted over 10-months. Delta or Omicron SARS-CoV-2 infection was defined by positive SARS-CoV-2 PCR and variant identification or inferred by dominant circulating variant. We constructed adjusted regression analyses to assess disease severity using three different measures: FiO2 >28% (fraction inspired oxygen), World Health Organization (WHO) outcome score >5 (assessing need for ventilatory support), and hospital length of stay (LOS) >3 days following admission for Omicron or Delta infection. Independent of other variables, including vaccination, Omicron variant infection in hospitalised adults was associated with lower severity than Delta. Risk reductions were 58%, 67%, and 16% for supplementary oxygen with >28% FiO2 Relative Risk (RR) = 0.42 (95%CI: 0.34–0.52), P < 0.001, WHO outcome score >5 RR = 0.33 (95%CI: 0.21–0.50), P < 0.001, and to have had a LOS > 3 days RR = 0.84 (95%CI: 0.76–0.92), P < 0.001. Younger age and vaccination with two or three doses were also independently associated with lower COVID-19 severity. We provide reassuring evidence that Omicron infection results in less serious adverse outcomes than Delta in hospitalised patients. Despite lower severity relative to Delta, Omicron infection still resulted in substantial patient and public health burden and an increased admission rate of older patients with Omicron which counteracts some of the benefit arising from less severe disease. AvonCAP is an investigator-led project funded under a collaborative agreement by Pfizer.