During 2005-2006, the first wave of data from the Longitudinal Study of Australian Children was released, Wave 1.5 data collection was conducted, including the Parental Leave in Australia Survey, Wave 2 development was finalised and the first phase of data collection undertaken, and work began on the development of Wave 3. This annual report summarises this work and presents highlights from Wave 1.5 and initial findings from the Parental Leave survey. It discusses parenting and families in Australia; mothers, fathers, work and well being; young children and their grandparents; neighbourhood effects on children's developmental outcomes; use of formal and informal child care for infants; and a comparison of children's temperament and adjustment across 20 years.