We look at the awareness of grammatical distinctions in children with reading difficulties, and at their ability to use this awareness in order to learn about the conventional spellings for morphemes like “ed” at the end of past verbs. Using longitudinal methods we show that, initially, children who are to become poor readers are actually better in this aspect of spelling and also in grammatical awareness tasks than younger children of the same reading level: but they are worse than these other children in tasks that tax their knowledge of phonologically based letter-sound correspondences. Later on, however, the poor readers lose their initial advantages in the conventional spelling of morphemes. We conclude that poor readers are initially held back by a failure to learn about letter-sound correspondences, and that this deprives them of successful reading experience, which in turn hampers the growth of their grammatical awareness and their learning how to spell morphemes.