Hospital-acquired hepatitis B (HBV) and C virus (HCV) infections continue to occur despite increased awareness of this problem among the medical community. One hundred six patients were infected in a haematology oncology ward for children, over the time period 1996 to 2000. Serum samples from 45 such patients and 3 from infected medical personnel were used for nucleic acid amplification. HBV core, as well as HCV core and hypervariable region 1 (HVR1) nucleotide sequences, were analysed by phylogenetic tree analysis, in order to characterise the epidemiological pattern of viral transmission on the ward. Samples from 32 patients were positive for HBV-DNA or HCV-RNA by PCR. Ten patients were positive for both markers. Seventeen out of twenty-three HCV core gene sequences were found to be evolutionarily related and clustered separately from other local sequences in the phylogenetic tree, indicating nosocomial transmission. This was confirmed by analysis of HVR1 gene sequences. One nurse and one physician from the ward were HCV RNA positive, but their HCV sequences were not related evolutionarily to those of the patient cluster. Fifteen out of nineteen HBV core gene sequences were also clustered together and were positioned separately in the relevant tree. Epidemiological investigation excluded a common source infection and indicated that spread of infection was most likely due to inappropriate infection control measures on the ward. No obvious risk factors for transmission were identified during the retrospective survey in patients with related sequences, except use of multidose vials for saline and poor staff compliance with routine hand hygiene procedures. The preventive measures that were introduced reduced the incidence of infection significantly. No new cases of HBV infection and only three anti-HCV seroconversions occurred over a period of 19 months. The introduction and maintenance of strict prevention measures over a 2 year period, combined with HBV vaccination, reduced significantly the incidence of new HCV and HBV infections.