Studies of inequalities in health between rural and urban settings have produced mixed and sometimes conflicting results, depending on the national setting of the study, the level of geographic detail used to define rural areas and the health indicators studied. By focusing on morbidity data from a national sample of individuals, this study aims to examine the extent of inequalities in health between urban and rural areas, as well as inequalities in health across rural areas of England. Multilevel analyses for poor self-rated health, overweight and obesity, and common mental disorders are reported for a sample of 30,776 individuals aged 18 years and older (obtained from the Health Survey for England years 2000-2003 combined) and distributed across 3645 small areas classed in four categories: two groups of urban areas (Greater London area or 'other cities') and two types of rural settings (semi-rural areas or villages). Results show that rural dwellers were significantly less likely than residents of urban areas to report their health as being fair or poor and to report common mental disorders, independent of their socio-demographic characteristics. However, as for urban settlements, there were significant variations in health across semi-rural areas and across villages, indicating the presence of health inequalities within rural settings in England. These inequalities were not fully explained by the individual composition of the areas or by the available measures of area socioeconomic conditions, indicating that in rural contexts more specific factors may have significance for health. Different policies and services for health promotion and care may need to be targeted to different types of rural areas.