Polycomb-group (PcG) and Trithorax-group proteins together form a maintenance machinery that is responsible for stable heritable states of gene activity. While the best-studied target genes are the Hox genes of the Antennapedia and Bithorax complexes, a large number of key developmental genes are also Polycomb (Pc) targets, indicating a widespread role for this maintenance machinery in cell fate determination. We have studied the linkage between the binding of PcG proteins and the developmental regulation of gene expression using whole-genome mapping to identify sites bound by the PcG proteins, Pc and Pleiohomeotic (Pho), in the Drosophila embryo and in a more restricted tissue, the imaginal discs of the third thoracic segment. Our data provide support for the idea that Pho is a general component of the maintenance machinery, since the majority of Pc targets are also associated with Pho binding. We find, in general, considerable developmental stability of Pc and Pho binding at target genes and observe that Pc/Pho binding can be associated with both expressed and inactive genes. In particular, at the Hox complexes, both active and inactive genes have significant Pc and Pho binding. However, in comparison to inactive genes, the active Hox genes show reduced and altered binding profiles. During development, Pc target genes are not simply constantly associated with Pc/Pho binding, and we identify sets of genes with clear differential binding between embryo and imaginal disc. Using existing datasets, we show that for specific fate-determining genes of the haemocyte lineage, the active state is characterised by lack of Pc binding. Overall, our analysis suggests a dynamic relationship between Pc/Pho binding and gene transcription. Pc/Pho binding does not preclude transcription, but levels of Pc/Pho binding change during development, and loss of Pc/Pho binding can be associated with both stable gene activity and inactivity.