Stretch Terry:

Hooded little baby bath towels are often made of this. It's knitted and usually thinner than towel material, though you can get it in heavier weights. Make the entire diaper out of it or just use it right next to the baby's skin, or just in a soaker pad. It doesn't form the "diaper rocks", and won't get stiff. You'll usually need 4 layers of stretch terry in a soaker pad.

Source: www.diapershop.com