Steady-state numerical simulations of the dipole flow test in layered aquifers demonstrate that the test produces a good estimate of the equivalent hydraulic conductivity anisotropy ratio for the part of the aquifer spanned by the well chambers. The effects of chamber size, different conductivity of layers and layer location on the estimated anisotropy ratios are presented. The steady-state dipole flow test, when performed at different levels in the well, can yield estimates of the down-hole anisotropy ratio distribution. Numerical simulations also illustrate that the skin effect can significantly distort the anisotropy estimates produced by the dipole flow test. © 1997 John Wiley & Sons, Ltd.