The Paraneoptera (Hemipteroid Assemblage) comprises the orders Thysanoptera (thrips), Hemiptera (bugs), Phthiraptera (lice) and Psocoptera (booklice and barklice). The phylogenetic relationships among the Psocodea (Phthiraptera and Psocoptera), Thysanoptera and Hemiptera are unresolved, as are some relationships within the Psocodea. Here, we present phylogenetic hypotheses inferred from SSU rDNA sequences; the most controversial of which is the apparent paraphyly of the Phthiraptera, which are parasites of birds and mammals, with respect to one family of Psocoptera, the Liposcelididae. The order Psocoptera and the suborder that contains the Liposcelididae, the Troctomorpha, are also paraphyletic. The two remaining psocopteran suborders, the Psocomorpha and the Trogiomorpha, are apparently monophyletic. The Liposcelididae is most closely related to lice from the suborder Amblycera. These results suggest that the taxonomy of the Psocodea needs revision. In addition, there are implications for the evolution of parasitism in insects; parasitism may have evolved twice in lice or have evolved once and been subsequently lost in the Liposcelididae.