This longitudinal project identified young children at risk of literacy difficulties and asked why some of these children fail to benefit from phonologically based intervention. Reception class children were screened to identify a group at risk of literacy difficulties and a matched group of children not at risk. Profiles were compiled for each child including measures of reading, spelling, memory, rapid naming, vocabulary and phonological awareness. A daily, 15-week, small group intervention was implemented with 67 at-risk children. Those who had not made progress in their literacy following this intervention participated in a second, individually administered intervention. The results indicate that letter knowledge and expressive vocabulary are key factors mediating a child's ability to benefit from a phonologically based intervention. Findings are discussed in the context of a lexical restructuring account of the development of spoken word recognition.