The initial stage of layer‐by‐layer sputtering of Si(111) surfaces with 500 eV Ar ions has been studied by using scanning reflection electron microscopy. At a moderate temperature of 900 K, vacancy islands are formed in the middle of wide terraces. At higher temperatures over 990 K, the atomic steps retreat as the ion dose is increased. The results show that layer‐by‐layer sputtering is characterized by vacancy creation caused by ion impact, and by thermally activated surface migration of vacancies. Moreover, the step area decorated by electron‐beam‐assisted carbon deposition acts as a step pinning site during the layer‐by‐layer sputtering. ©1996 American Institute of Physics.