Reactive diluents are used to enhance the processability of thermoplastic polymers. In one such system considered here, in situ polymerisation of monomer styrene results in phase separation of the initially dissolved polyethylene. On-line turbidity measurements during the polymerisation show that an externally impoosed shear flow delays the beginning of phase separation, i.e. flow-induced phase mixing takes place. The observed influence on the mechanical properties indicates a possible effect on final blend morphology also.