Background: Dyslexia is now generally acknowledged to involve difficulties in phonological processing. However, the links between reading difficulties and speech difficulties remain unclear. Method: In the present study, 17 children with speech difficulties between the ages of four and six were compared to children with a family history of dyslexia and normally developing controls on phonological processing, phonological learning, phonological awareness and literacy tasks. Results: The two groups of children at risk of reading difficulties showed very similar patterns of impairment, with average vocabulary but poor input and output speech processing, phonological learning, phonological awareness and reading development. Conclusions: It is concluded that the antecedents of reading difficulty are similar in these two groups of children, with both groups showing deficits in the development of phonological representations.