Specific reading disability (SRD) is now widely recognised as often being caused by phonological processing problems, affecting analysis of spoken as well as written language. According to one theoretical account, these phonological problems are due to low-level problems in auditory perception of dynamic acoustic cues. Evidence for this has come from studies showing poor discrimination of frequency-modulated from unmodulated tones. We measured frequency modulation detection limens (FMDLs) in 16 children with specific reading disability (SRD group), 16 children with mild to moderate hearing loss (SNH group) and 16 age-matched controls (CA group) aged 8-14. To obtain information about possible mechanisms used in frequency modulation detection, FMDLs were measured at modulation rates of 2 and 20 Hz, both in the absence and the presence of amplitude modulation, intended to force listeners to rely, if possible, upon phase-locking cues. Although both the SNH and SRD groups showed a trend for elevated FMDLs at both 2 and 20 Hz, these differences reached statistical significance for the SNH group alone. However, the SNH group had no evidence of literacy impairments. This study thus shows that impairments in perceiving dynamically modulated auditory stimuli do not necessarily lead to difficulty in learning to read.