Many thanks for all your suggestions!
I took Tartan’s advice and made a few samples. Although the usual 2.5 inch looked fine I thought it was a bit stiff compared to the softness of the quilt.
In the end I did what Roguequilter suggested. I made a 1.5 inch single binding, machine stitched it to the front then hand stitched it to the back.
Quilterpurpledog raised an interesting point about how well the flannel will wear. As this is a child’s charity quilt I’m not sure what the ‘life-expectancy’ of the quilt will be -it’s definitely not an heirloom! Perhaps charity quilts are treasured for years to come. There again a family member said a parent might not want to keep something that had been given to their child in hospital as it would remind them of an anxious time.
Either way the little quilt is nearly finished. I’ve enjoyed working with flannel so much I’ve bought some more today!