Biological Soil Crusts (BSC) are distributed across three quarters of Australian's land. Previous remotely-sensed studies, which were applied to areas in which BSC occur, either neglected BSC all together or considered BSC species in one group and did this when they were in a dry state. Previous studies have reported that there is a considerable similarity between the spectra of BSC and dry bare soil thus leading to potential misinterpretation. The Perpendicular Vegetation Index (commonly called PD54) was developed in the areas in which BSC were not common. However, some studies have employed this index in the areas in which BSC are common. This study utilized ground-level spectral measurements to synthesize Landsat Thematic Mapper (TM) imagery and examined the BSC effects on this index. Results showed that neither individual BSC with background soil, nor 'BSC pattern spectra' affect the vegetation and soil lines. This applies when the percentage cover of BSC varies from 1.69% to 36.99%. Thus, the use of PD54 in the application of grazing gradient analysis can be misleading as the results are insensitive to BSC presence.