The double film extraction technique was used to measure the deposition rate and the entrainment rate of droplets for vertical upward annular two-phase flow in a small diameter tube. The test section was around tube of 5 mm in inside diameter, air and water were used as test fluids and the system pressure was varied within 0.14-0.76 MPa. It was shown in the present experimental conditions that the deposition rate was primarily influenced by the droplet concentration in the gas core and that the entrainment rate was correlated well with the dimensionless number denoting the ratio of interfacial shear force to surface tension force acting on the surface of liquid film. These results were consistent with available empirical correlations that were developed using the experimental data for larger diameter tubes. (C) 2004 Elsevier Ltd. All rights reserved.