Direct underwater observation of micro-habitat use by 1838 young Atlantic salmon Salmo salar [mean L T 7·9 3·1(..) cm, range 3-19] and 1227 brown trout Salmo trutta (L T 10·9 5·0 cm, range 3-56) showed both species were selective in habitat use, with differences between species and fish size. Atlantic salmon and brown trout selected relatively narrow ranges for the two micro-habitat variables snout water velocity and height above bottom, but with differences between size-classes. The smaller fishes <7 cm held positions in slower water closer to the bottom. On a larger scale, the Atlantic salmon more often used shallower stream areas, compared with brown trout. The larger parr preferred the deeper stream areas. Atlantic salmon used higher and slightly more variable mean water velocities than brown trout. Substrata used by the two species were similar. Finer substrata, although variable, were selected at the snout position, and differences were pronounced between size-classes. On a meso-habitat scale, brown trout were more frequently observed in slow pool-glide habitats, while young Atlantic salmon favoured the faster high-gradient meso-habitats. Small juveniles <7 cm of both species were observed most frequently in riffle-chute habitats. Atlantic salmon and brown trout segregated with respect to use of habitat, but considerable niche overlap between species indicated competitive interactions. In particular, for small fishes <7 cm of the two species, there was almost complete niche overlap for use of water depth, while they segregated with respect to water velocity. Habitat suitability indices developed for both species for mean water velocity and water depth, tended to have their optimum at lower values compared with previous studies in larger streams, with Atlantic salmon parr in the small streams occupying the same habitat as favoured by brown trout in larger streams. The data indicate both species may be flexible in their habitat selection depending on habitat availability. Species-specific habitat overlap between streams may be complete. However, between-species habitat partitioning remains similar.2002 The Fisheries Society of the British Isles