Latent class models (LCMs) can be used to assess diagnostic test performance when no reference test (a gold standard) is available, considering two latent classes representing disease or non-disease status. One of the basic assumptions in such models is that of local or conditional independence: all indicator variables (tests) are statistically independent within each latent class. However, in practice this assumption is often violated; hence, the two-LCM fits the data poorly. In this paper, we propose the use of Biplot methods to identify the conditional dependence between pairs of manifest variables within each latent class. Additionally, we propose incorporating such dependence in the corresponding latent class using the log-linear formulation of the model. Copyright © 2008 John Wiley & Sons, Ltd.