During the 1987 federal election campaign, the Prime Minister made the pledge that 'by 1990 no child will need to live in poverty'. As a first step towards that goal a family package was announced during the election and spelt out in greater detail in the 1987-88 Budget in September. This report analyses the impact of the family package on children living below the poverty line. The report begins by noting that financial poverty among dependent children has increased from around 6 per cent in the mid-sixties to 20 per cent by the mid-eighties. This corresponds to a rise in the total number of children in poverty from 233 thousand in 1966 to over 800 thousand in 1985-86. International comparisons of the incidence of child poverty at the turn of the decade also show Australia in a very poor light. Using standardised definitions, the incidence of .child poverty in Australia far exceeds that in a number of other industrialised economies with the exception of the United States. The report follows earlier research by using the poverty line developed by the Poverty Commission - the Henderson poverty line - to base its assessment of, the impact of the family package. It is argued that the incidence of poverty - the proportion of the population below the poverty line - is an insensitive measure against which to assess the impact of the family package. This is because poverty incidence only changes when families are moved from below the poverty line to above it. The report discusses an alternative measure, based on the concept of the poverty gap, and applies this to assess the family package. After describing the main elements in the family package, the report discusses the assumptions on which the assessment of its impact is based. In analysing the impact of the family package on child poverty, account is taken of housing costs, using projections derived from the 1981-82 Income and Housing Survey. The results indicate that about 100 thousand of the 540 thousand children in. pensioner and beneficiary families will be moved out of poverty by the family package. However, all such families with children will receive increased incomes, and it is estimated that the poverty gap is reduced by $160 million, from $350 million to $190 million. It is concluded that although the family package represents a significant improvement in the incomes of poor families, more will be required if the child poverty pledge is to be achieved. While additional income support measures are warranted, these need to be part of a co-ordinated, multidimensional policy approach. The report stresses the need for housing and employment policies which would help to ensure that families do not need to be so reliant on income support in the first place.