Lactose intolerance is a recognized complication of some episodes of diarrhoea. Whereas it is of clinical importance in relatively few children with acute diarrhoea it seems to be a more common problem in children presenting with persistent diarrhoea, especially in malnourished children with severe diarrhoea. We describe a recent study which also demonstrated adverse clinical and nutritional consequences in the majority of children with mild but persistent diarrhoea consuming 6 g lactose/kg body weight/d. It is desirable to identify these children who need to reduce their lactose intake in order to limit unnecessary dietary changes which are expensive to implement and/or nutritionally disadvantageous. Admission clinical characteristics were analyzed for their ability to predict clinical outcome in a group of 33 children with persistent diarrhoea taking a lactose‐containing diet. The results of tests of stool reducing substances and a lactose breath hydrogen test (LHBT) were analyzed in the same group whose clinical management had been independent of the test results. Eighty‐nine percent of children who deteriorated had one of the following characteristics: age <12 months, weight‐for‐height less than ‐2 SD below NCHS norms or fever >37°C. Children who unequivocally improved while continuing to take lactose could not be selected without the risk of including children who deteriorated. Neither tests of stool reducing substances nor the LBHT improved the predictive value of simple clinical parameters. Reduction of lactose in the diet of children with persistent diarrhoea who have any of these parameters is recommended, but mixing of milk with cereal or substituting with fermented milk products is preferable to milk withdrawal or dilution with water. Copyright © 1992, Wiley Blackwell. All rights reserved