Plants in streams act as physical ecosystem engineers, both influencing and responding to hydrogeomorphic processes such as fine sediment retention. Instream vegetation may also influence propagule dispersal and retention, shaping plant community dynamics. These plant‐sediment interactions may result in synergistic feedback promoting hydrogeomorphic complexity and biogeomorphic succession. However, the role of aquatic plants (submerged or mostly submerged) in trapping propagules, fine sediment and organic matter in degraded lowland streams is uncertain. In this study, we sampled sediment (≤5 cm depth) from eight streams ranging in land use from rural to urban, including within patches of aquatic vegetation and unvegetated locations. We conducted a propagule bank trial to identify the abundance and diversity of propagules and analysed the particle size and organic matter composition of the samples. A total of 8,365 seedlings from 113 plant species were recorded with a range of hydrological tolerances. Aquatic plants retained 56% more propagules and 32% more species, and marginal vegetation retained 250% more propagules and 48% more species, than open channel locations (the least retentive location). Similar patterns were found for fine sediment and organic matter retention. Propagule bank communities were different across land‐use types but not sampling locations. The trapping effect of aquatic vegetation diminished as catchments became more urbanised. This study provides evidence that aquatic plants retain more propagules and species, and fine sediment and organic matter than vegetation‐free channel locations. Improving aquatic vegetation in streams may be an important early step in restoring hydrogeomorphic complexity and propagule retention, and the facilitation of biogeomorphic succession in degraded streams. Unfortunately, heavily urbanised streams with flashy flow regimes are unlikely to benefit from this function unless catchment‐scale hydrology is addressed.