Efforts to improve the social and economic participation of lone mothers receiving welfare need to be mindful of the obstacles experienced by many of these women, and recognise the need for appropriate support and services for those who require assistance. Since 1999, reform of the income support or welfare system has been a priority of the Australian Government. One of the key client groups targeted by the reforms and policy initiatives is lone parents, particularly lone mothers who comprise the vast majority of lone parents. The aim of this paper is to quantify the extent to which lone mothers experience barriers likely to impede or make more difficult their transition into employment. The paper outlines the key aspects of welfare reform in Australia, then discusses research examining barriers and obstacles to employment and workforce participation, and the prevalence and consequences of these factors for lone mothers. Drawing on data from the National Survey of Mental Health and Wellbeing, conducted by the Australian Bureau of Statistics, it sets these issues in an Australian context.