Is it ever correct to use the word whilst instead of the word while?
I've always thought that "whilst" (instead of "while") and "amongst" (instead of "among") were exclusively British.
No there is no rule.The two words have the same meaning, 'whilst' is the older version (some dictionaries list it as obsolete) and it usually appears only in formal or poetic writing.

If you stick to 'while' you won't ever be wrong, whereas 'whilst' can easily look out of place.
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Emotion: wink
I always thought it was a British thing.
You're mostly right, pedant. However, as the immigrant population in the USchanges, there are more and more people here who were educated to use British english and one sees it occasionally.

Now that SOMEONE Emotion: wink has finally replied to this thread, I can show off a bit of arcana Emotion: stick out tongue

While and whilst are more or less interchangeable when the meaning is although or whereas. For example: Whilst many people agree that SUVs are hazardous on the roads, little or no effort has been made to limit their use. One could easily substitute "Although..." or "Whereas..." for Whilst and the meaning would be the same.

However, whilst also means "when" and is considered more formal and probably even archaic. I do see it in older (including 20th c.) novels, though, and I think this meaning should be known and understood by english speakers. For example: I saw him while I was waiting for a train. OR I saw him whilst I was waiting for a train.
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that should be 'I saw him whilst waiting for a train', you don't need the 'I was'
Sounds to me like the 'st' in whilst represents the tail-end of a substantive verb, hence the absence of 'I was' in the example. Can anybody confirm or correct this?
As a rule of thumb, whilst is used when the verb the follows is a form of 'to be', as in "whilst I'm ... ", "whilst he was".

I personally think it sounds best when you drop the "I was" or "they were" etc. off, but I don't think that's got anything to do with the -st.
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 CalifJim's reply was promoted to an answer.
Same here, but I have always thought that "whilst" was on the slow road out of common English usage.

"Amongst" and "among" both seem to occur in American English however. Whilst "whilst" seems very King James.
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