We have developed a direct patterning process for InP based materials which uses ion exposure followed by dry etching to produce surface topography. The substrate is first implanted with a 20 keV Ga+ beam focused to 0.2 micron diameter. The surface pattern is then developed in the substrate by etching with or without a low energy (25 -100 eV) flood Ar+ ion beam in a C12(5×10-4 Torr) atmosphere at 180 to 2000 C. This process has been integrated in a common vacuum chamber with a gas source molecular beam epitaxy (GSMBE) system. In-situ patterning and high quality overgrowth has been demonstrated for low Ar+ ion energies during etching. In this paper, we will describe a model for the patterning mechanism and suggest how it may be exploited to achieve a complete vacuum lithography process compatible with epitaxial regrowth.