New Zealand's approach to literacy instruction is predominantly whole language. Explicit code-orientated literacy instruction is not favoured, however, most teachers are believed to include phonics in their literacy lessons. No study has been reported on phonics use in New Zealand schools. Survey responses on the use of phonics instruction from 666 primary school teachers were analysed. We also assessed knowledge of the basic language constructs related to early reading success with 55 teachers participating in a professional development program on literacy teaching. A word identification prompt task based on six common word error scenarios experienced by beginning readers was also administered. Results of the phonics survey revealed that 90% of teachers indicated they used phonics in their literacy instruction. Knowledge of basic language constructs was variable: phonological and phonemic knowledge were generally good, but understanding of phonic and morphological constructs was relatively weak. Only 40% of initial word identification prompts were focussed on word-level information; the remainder (60%) were based on context or were non-specific. The implications of these findings for beginning readers are discussed.