Practically all experimental studies of rapid prototyping using the direct laser deposition process to date have cited the superior flow characteristics of gas atomised powders as the build material and limited the process investigation to that type. Little work has been done to investigate the effect of using water atomised metal powders, despite their use in other fields and potentially advantages in powder feed laser cladding. In addition, most theoretical studies of the powder flow and laser interaction during the process have begun with the premise that the particles are spherical, an argument does not hold true when the powder has been formed by water atomisation. Using a coaxial powder feed head and a CO2 laser, this work provides an analysis of the performance of the different powder types through a like-for-like study of the laser deposition process using water and gas atomised 316L stainless steel powders. Different stages of the process, including the characteristics of the two pow ers prior to reaching the melt pool, the dimensions and geometries of the deposited tracks and the final surface finish and material microstructures are examined and compared. Optical microscopy, scanning electron microscopy (SEM), x-ray diffraction and other analysis methods are used. The work has demonstrated significant differences between the two sets of results and overall performance of the different powder types.