Skills of inference are needed not just to be able to "read between the lines," to detect the unspoken hidden meanings that enrich overall understanding of a text or to draw one's own personal conclusions about a text. They are needed for all the other tasks that teachers want their children to do in handling texts: to understand the effects achieved through choices in vocabulary, to recognize what the writer is trying to accomplish through the whole text and to appreciate what the impact on the reader may be. Almost any reading activity that goes beyond literal understanding involves some degree of inference. A literature review to uncover what is known about the reading skills of inference and deduction was conducted in late 2007, under contract to the Department for Children, Schools and Families. The specific purpose was to distill implications for teaching from academic research. Much of the literature concerned the nature of inference and the taxonomies of different types of inference that various researchers had identified. The search was guided by four research questions: (1) Are there different skills within inference? (2) How can pupils best be taught to use inference skills? (3) What strategies are most effective in teaching inference skills to pupils of different ages/abilities? and (4) What does progression in inference look like and how can it be supported? Overall, few studies explicitly investigating best methods for teaching skills were identified. A key finding of the review was that the ability to draw inferences predetermines reading skills: that is, poor inferencing causes poor comprehension and not vice versa. Practical suggestions for teachers for inference instruction are also presented in this report. (Contains 3 tables.)