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It is generally accepted that dyslexia should be identified early for interventions to have maximum effect. However, when children speak English as an additional language (EAL), diagnosis is more complex and there is concern that these children tend to be under-identified. This paper reports a longitudinal study following the development of phonological awareness skills in relation to progress in learning to read with a cohort of British Asian children learning EAL and their monolingual peers. It also sought to determine the usefulness of a measure of phonological skills for the identification of dyslexic-type difficulties in children learning EAL. Analysis revealed that both cohorts achieved similar levels of reading accuracy in school Years 2, 4 and 6, with higher levels of reading comprehension for the monolingual children and faster reading fluency for children learning EAL in each school year. There was a similar pattern of relationships between the reading measures and measures of phonological awareness for both groups of children. However, monolingual children achieved higher levels of rhyme detection and alliteration fluency whilst the children learning EAL achieved faster number naming times. Overall, a phonological assessment battery was useful in identifying reading accuracy related difficulties in both groups of children. However, concerns are raised about the sensitivity of such measures following the introduction of the Literacy Hour.