The development of the feather buds during avian embryogenesis is a classic example of a spacing pattern. The regular arrangement of feather buds is achieved by a process of lateral inhibition whereby one developing feather bud prevents the formation of similar buds in the immediate vicinity. Lateral inhibition during feather formation implicates a role of long range signalling during this process. Recent work has shown that BMPs are able to enforce lateral inhibition during feather bud formation. However these results do not explain how the feather bud escapes the inhibition itself. We show that this could be achieved by the expression of the BMP antagonist, Follistatin. Furthermore we show that local application of Follistatin leads to the development of ectopic feather buds. We suggest that Follistatin locally antagonises the action of the BMPs and so permits the cellular changes associated with feather placode formation. We also provide evidence for the role of short range signalling during feather formation. We have correlated changes in cellular morphology in feather placodes with the expression of the gene Eph-A4 which encodes a receptor tyrosine kinase that requires direct cell-cell contact for activation. We show that the expression of this gene precedes cellular reorganisation required for feather bud formation.