Summary.Forty‐nine children (aged 8:4 to 10:4) were grouped according to reading ability and were tested on lexical decision, naming and spelling of words and non‐words which differed in orthographic neighbourhood size. Friendly words with many neighbours caused significantly fewer errors on all these tasks. Item analysis demonstrated that these effects were robust when corrected for frequency, regularity, word length and age of acquisition. Good readers showed less reliance on neighbourhood size and more evidence of accurate use of grapheme‐phoneme correspondence rules. The results indicate that children find common orthographic sequences easier to read and spell before they have learned to use grapheme‐phoneme correspondences consi