Background: Needs assessment is a valuable approach for determining the way health and social services allocate resources to people with cancer and their caregivers.

Aim: To assess the reliability, validity and acceptability of a Needs Assessment Tool (NAT) in a palliative care clinical setting.

Methods: Psychometric properties of the NAT were initially explored in a pilot study involving filmed simulated advanced cancer patient and caregiver consultations. Further testing was undertaken in a clinical setting to determine the inter‐rater reliability, validity and feasibility of the NAT.

Results: The results of the pilot study suggested good reliability and acceptability in a simulated setting. Further testing indicated that the patient daily living item was positively correlated with the Resource Utilisation Groups—Activities of Daily Living (r=0.74) and negatively correlated with the Australian Karnofsky Performance Scale (r=−0.84). Prevalence‐ and bias‐adjusted kappa values also indicated adequate agreement between Palliative Care Problem Severity Score items and the patient physical item (0.48), psychological item (0.45) and caregiver well‐being item (0.42).

Conclusions: Needs assessment not only facilitates the identification of people who have specific concerns or are dissatisfied with some aspect of their care, but also determines the person's desire for assistance and involvement with services. The NAT is a highly acceptable and efficient tool that can be used by health professionals with a range of clinical expertise to identify individuals' needs, thereby enabling a better match of interventions of specialist services more closely linked to needs. Copyright © 2009 John Wiley & Sons, Ltd.