The effect of phonotactic probability (PP) and neighbourhood density (ND) on triggering word learning was examined in children with Language Impairment (3;04-6;09) and compared to Typically Developing children. Nonwords, varying PP and ND orthogonally, were presented in a story context and their learning tested using a referent identification task. Group comparisons with receptive vocabulary as a covariate found no group differences in overall scores or in the influence of PP or ND. Therefore, there was no evidence of atypical lexical or phonological processing. 'Convergent' PP/ND (High PP/High ND; Low PP/Low ND) was optimal for word learning in both groups. This bias interacted with vocabulary knowledge. 'Divergent' PP/ND word scores (High PP/Low ND; Low PP/High ND) were positively correlated with vocabulary so the 'divergence disadvantage' reduced as vocabulary knowledge grew; an interaction hypothesized to represent developmental changes in lexical-phonological processing linked to the emergence of phonological representations.