Human-induced erosion regularly delivers massive quantities of fine sediments into streams and rivers forming large static bodies of sediment known as sand slugs, which smother in-stream habitat, alter community structure, and decrease biodiversity. Sand slugs are widespread in parts of southeastern Australia as well as in many other parts of the world, and there is now considerable interest in restoring such affected streams. The reintroduction of large timber is widely suggested as a strategy for restoring habitat complexity, but this has rarely been tested in sand slug–affected streams. We examined the response of fish populations to wood addition to two streams in southeastern Australia that have been impacted by sand slugs. Manipulated sites (three per treatment) had either one or four timber structures added, and these sites were compared with (three) unmanipulated (control) sites before and after the manipulation occurred. Despite a supraseasonal drought during the study, we observed short-term increases in the abundance of Mountain galaxias (Galaxias olidus) at the four-structure sites, while both the four-structure and the one-structure treatments appeared to buffer against drought-induced declines in two other species, River blackfish (Gadopsis marmoratus) and Southern pygmy perch (Nannoperca australis), relative to controls. However, drought eventually caused the complete loss of surface water from these streams and the loss of fish from both manipulated and unmanipulated sites. Thus, although the study supports the use of timber structures as a means of increasing local fish abundances, these beneficial effects were, in these streams, contingent upon permanency of flow. Because sedimentation has depleted the number of permanent refuge pools in these creeks, recovery rates of the fauna (i.e., resilience) are likely to be slow. We therefore conclude that in streams subjected to frequent disturbance, restoring refugia may be as, if not more, important as restoring what we term residential habitat.