A previous study showed that variations in deprivation within small localities in England and Wales influenced the rates of self-reported limiting long-term illness, controlling for overall levels of deprivation. These results suggest that while morbidity is related to overall levels of material deprivation, the distribution of resources within small areas have a significant effect on health outcomes. However, it is possible that these area effects become redundant once individual-level characteristics are accounted for. This analysis examines whether area-level deprivation and variations in deprivation are significant indicators of individual-level limiting long-term illness, once individual characteristics have been accounted for.