The aim of this study was to assess whether nebulized budesonide may substitute for oral prednisolone in the management of children whose asthma is severe enough to warrant hospital admission, but who have no life threatening features. In a prospective, double-blind, randomized study nebulized budesonide (2 mg 8 hourly) was compared with oral prednisolone (2 mg/kg at entry and again at 24 h) in 46 children admitted to hospital with severe asthma exacerbations. Efficacy variables (including lung function measurements such as the primary outcome variable, Forced Expiratory Volume in 1 second (FEV1) and symptoms) were measured 24 h after treatment initiation. FEV1 improved significantly compared to baseline in patients who received nebulized budesonide compared to the prednislone group. The data show nebulized budesonide to be at least as effective as oral steroid in improving lung function and symptom severity in severe exacerbations of childhood asthma.