Many studies have reported an inferred causal association of income poverty with physical health among children; but making causal inference is challenging due to multiple potential sources of systematic error. We quantified the short-run effect of changes in household poverty status on children's health (asthma and ear infections) and service use (visits to the doctor and parent-reported hospital admissions), using a national longitudinal study of Australian children, with particular attention to potential residual confounding and selection bias due to study attrition.