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Background: Refugee children might have experienced violent and traumatic events before settling into a new country. In the United Kingdom, the number of refugee children is increasing; however, little is known about their psycho‐social and physical well‐being. Aim: This study aims to investigate the psychological well‐being and behaviour of refugee children compared to British‐born children on a number of psychological, social, behavioural, and health‐related issues and to investigate the role of friendship as a protective factor. Samples: This study utilized a sample of 149 refugee children recruited from two charities, 79 of which are children aged 6–10 years and 70 older refugee children aged 11–16 years. The study also included 120 non‐refugee children recruited from primary schools aged 6–10 years. Methods: This is a cross‐sectional study that investigates the psycho‐social well‐being of refugee children compared to non‐refugee British‐born children. The study explored symptoms of posttraumatic stress disorder, emotional and behavioural problems (Strengths and Difficulties Questionnaire), self‐esteem, friendships and popularity, bullying and victimization, physical health, and psychosomatic problems. Results: Young refugee children reported more peer problems, functional impairment, physical health, and psychosomatic problems compared to the control children and older refugee children groups. On the other hand, older refugee children had lower self‐esteem (academic and social self‐peers) compared to the younger refugee children group. The differences between the groups were explained by friendship quality, number of friends, peer bullying/victimization, or sibling bullying/victimization except for physical health and psychosomatic problems. Conclusions: While refugee children were found to be at risk on various levels, the findings also point to the fact that social relationships including friendship quality and number of friends played an essential protective role. Conversely, bullying was a risk factor that explained many of the refugees' problems. These findings pave the way for future research to further probe into the well‐being of refugee children in the United Kingdom while also targeting relevant intervention schemes specifically tailored to address their needs. [ABSTRACT FROM AUTHOR]