Summary When grassland is grazed by livestock, the structure of the sward changes in a patchy manner. With continuous selective grazing there is a mosaic of short and tall patches but as grazing intensifies the area of short-grazed patch increases until the paddock has a lawn-like appearance. This mosaic of patch structures can be stable, as short patches tend to attract repeated grazing and tall patches tend to be avoided. Because heavy grazing can detrimentally affect soil and water functions in grassland (ultimately resulting in erosion), we aimed to assess how well the physical structure of the sward reflects soil surface condition. We described four grassland patch structures that were assumed to reflect different levels of present grazing, and to some extent, past grazing pressure. We assessed patch structure and two other grass-related variables (basal area of a ‘large tussock’ functional group and basal area of all perennial grass) as possible indicators of soil surface condition. Three indices of condition were measured in the field. The infiltration and nutrient cycling index declined progressively across patch structures, consistent with increasing grazing pressure. The stability index was found to be reduced only for the most heavily grazed grass structure (short patches). We found the ‘large tussock’ grass functional group to be a more sensitive indicator of soil surface condition than the group consisting of all perennial grasses. We found no evidence of sudden soil surface condition decline beyond a certain level of grass basal area, that is, there was no evidence of thresholds, rather, incremental loss of condition accompanied grass decline. We are thus not able to further refine an earlier proposed management recommendation ‘Graze conservatively to maintain dominance of large and medium tussock grasses over 60–70% of the native pastures’, except to suggest the use of short patches as a more practical indicator, rephrasing the recommendation as ‘Graze conservatively to allow a maximum of 30% short-grazed patches in native pastures’.