BACKGROUND: With a view to developing health systems strategies to improve reach to high-risk groups, we present information on health and survival from household and health facility perspectives in five districts of southern Tanzania. METHODS: We documented availability of health workers, vaccines, drugs, supplies and services essential for child health through a survey of all health facilities in the area. We did a representative cluster sample survey of 21,600 households using a modular questionnaire including household assets, birth histories, and antenatal care in currently pregnant women. In a subsample of households we asked about health of all children under two years, including breastfeeding, mosquito net use, vaccination, vitamin A, and care-seeking for recent illness, and measured haemoglobin and malaria parasitaemia. RESULTS: In the health facility survey, a prescriber or nurse was present on the day of the survey in about 40% of 114 dispensaries. Less than half of health facilities had all seven 'essential oral treatments', and water was available in only 22%. In the household survey, antenatal attendance (88%) and DPT-HepB3 vaccine coverage in children (81%) were high. Neonatal and infant mortality were 43.2 and 76.4 per 1000 live births respectively. Infant mortality was 40% higher for teenage mothers than older women (RR 1.4, 95% confidence interval (CI) 1.1 - 1.7), and 20% higher for mothers with no formal education than those who had been to school (RR 1.2, CI 1.0 - 1.4). The benefits of education on survival were apparently restricted to post-neonatal infants. There was no evidence of inequality in infant mortality by socio-economic status. Vaccine coverage, net use, anaemia and parasitaemia were inequitable: the least poor had a consistent advantage over children from the poorest families. Infant mortality was higher in families living over 5 km from their nearest health facility compared to those living closer (RR 1.25, CI 1.0 - 1.5): 75% of households live within this distance. CONCLUSION: Relatively short distances to health facilities, high antenatal and vaccine coverage show that peripheral health facilities have huge potential to make a difference to health and survival at household level in rural Tanzania, even with current human resources.