Diffraction of helium atoms from randomly distributed step edges on the otherwise smooth (001) surface of Ni has been observed. Measurements for different azimuths near the 〈100〉 direction indicate that the step edges are lined up perpendicular to the 〈100〉 direction. The effect of CO adsorption on both the amplitude of the diffraction oscillations and also on specular scattering has been studied. The in-plane diffraction oscillations from the steps and the specular peak intensity show a similar attenuation with CO adsorption. This is interpreted in terms of a simple model for the effect of adsorption on the step diffraction oscillations. With increasing CO adsorption, the step edge diffraction patterns are also found to be slightly shifted suggesting a continuous change in step edge shape with adsorption. © 1990 American Institute of Physics.