Twenty-one F₁ hybrids of a diallel cross involving 7 elite inbred lines, were grown over 10 environments with different moisture stress conditions. Several agro-physiological traits were recorded including: eighth leaf area (ELA), leaf area index (LAI), ear leaf area (ErLA) and grain yield/plant (GY). All traits were reduced due to moisture stress with the greatest reduction being in grain yield/plant (70.81%) followed by LAI (54.82%), ErLA (43.7%), and ELA (42.3%). Genes with mainly additive effects were controlling LAI which appeared to be the most promising trait for selection for grain yield improvement since it did not show genotype x environment interaction and was also genetically correlated with grain yield/plant under water stress conditions. Two cycles of directional phenotypic selection for increased as well as decreased LAI were performed in the F₂'s of the highest three F₁ hybrids in grain yield/plant under favourable (F) and moisture stress (S) conditions. Positive responses to selection for increased LAI in the favourable environment were obtained in the three populations, which averaged 9.62% and 7.13% of the control mean in the first and second cycles of selection, respectively. Such responses were greater than those obtained under strongly stressed conditions (4.78% and 3.74%, respectively). A reverse situation was obtained in the decreasing direction. Under the strongly stressed environmental conditions, greater responses to selection (14.43 and 12.53%, respectively) were obtained in mean LAI under stress than under favourable conditions (7.92 and 7.09, respectively). Consistent and parallel correlated responses were obtained in ELA, ErLA and grain yield. Correlated response to selection for increased LAI in grain yield/plant amounted to 13.07% and 12.53% under favourable conditions whereas it reached 17.09% and 7.18% under stress. However, selection for decreased LAI produced concurrent response in grain yield/plant which was reduced by an average of 10.6% and 11.50%. Reduction in grain yield in the stressful environment amounted to 15.48% and 9.4% for the first and second cycles, respectively. Results indicated that partitioning assimilates was not consistent in the different populations and should be considered while practicing selection for increased LAI.