The paper describes a vision inspection system that is developed to detect diffused LED defects, namely scratches, bubbles, contamination, blister/blemish, fuzzy dome and off centre defects in less than 200 ms using a 200 MHz Pentium PC, a Matrox Genesis frame grabber and a Pulnix high speed camera. Various image-processing techniques are utilised for the inspection task. A machine vision approach that comprises pre-processing, image segmentation, clean up and feature extraction operations is implemented to perform the automated cosmetic flaw inspection. Based on 200 LED samples, the system was found to be 100 accurate in detecting LED dome defects on LEDs of different colour and intensity. The system can also classify defects into different categories and was found to be 90 accurate. © 1998 Springer-Verlag London Limited.