The aim of the project was to determine factors which explain the distribution of macroinvertebrates in two Melbourne streams both drastically affected by urbanisation. A detailed description is given of Dandenong Creek, flowing through the south-eastern suburbs, and Darebin Creek, in the northern suburbs, emphasising stream features likely, or known, to influence the drift and benthic fauna. Faunal sampling was carried out in Dandenong Creek from June 1992 until July 1993, and in Darebin Creek from February 1995 until March 1998. Physicochemical parameters were also recorded. The collected data, together with previously existing data, were analysed using multivariate analyses: non-metric multi-dimensional scaling (NMDS); analysis of similarities (ANOSIM); matching biotic and abiotic variables using BIOENV, and principal component analysis (PCA). Various biotic and diversity indices were calculated in an attempt to identify the major factors responsible for the failure of the fauna to recover from previously more seriously degraded water quality. The contribution of drift to the colonisation potential in Dandenong Creek appeared to be impacted by retarding basins, underground barrel-draining and channelization. Results also indicated that increased conductivity adversely affected the fauna in the lower reaches of Dandenong Creek. It was concluded that in Darebin Creek, high nutrient levels, as well as other pollutants, had resulted in low macroinvertebrate diversity in both the drift and benthos. If, as this study suggests, faunal diversity is a valid measure of stream health, the following factors need to be addressed for catchment-wide, stream management: lack of riparian zone vegetation (increasing bank erosion and making the benthic habitat unstable, with greater temperature variability); control of stormwater runoff (flow variability, increased conductivity, nutrient levels, sediment loads, sewage effluent, industrial discharges and heavy metals), and to modify retarding basins to increase stream continuity.