As filed with the Securities and Exchange Commission on June 12, 1998
                                                  Registration No. 333-

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                         -------------------------------

                                    FORM S-8
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933

                        VERMONT FINANCIAL SERVICES CORP.
             (Exact name of Registrant as Specified in Its Charter)

        Delaware                                            03-0284445
(State or other jurisdiction of                        (I.R.S. Employer  
incorporation or organization)                         Identification No.)

                                 100 Main Street
                           Brattleboro, Vermont 05301
                    (Address of Principal Executive Offices)

             Vermont Financial Services Corp. 1994 Stock Option Plan
                 (as amended and restated as of August 13, 1997)
                            (Full Title of the Plan)

                              JOHN D. HASHAGEN, JR.
                      President and Chief Executive Officer
                        Vermont Financial Services Corp.
                                 100 Main Street
                           Brattleboro, Vermont 05301
                     (Name and Address of Agent For Service)

                                 (802) 257-7151
          (Telephone number, including area code, of agent for service)

                                    Copy to:
                             STEPHEN J. COUKOS, ESQ.
                            Sullivan & Worcester LLP
                             One Post Office Square
                           Boston, Massachusetts 02109
<TABLE>
<CAPTION>
                                                   CALCULATION OF REGISTRATION FEE

                                                                  Proposed Maximum          Proposed Maximum
                                                Amount to be     Offering Price Per        Aggregate Offering          Amount of
  Title of Securities to be Registered           Registered            Share                     Price             Registration Fee
<S>                                            <C>                  <C>                      <C>                      <C>

Common Stock, $1.00 par value                   660,000 (1)          $26.865 (2)              $17,730,900 (2)          $5,230.62
<FN>
(1) Represents the additional number of shares of Common Stock authorized under the 1994 Stock Option Plan, as amended and restated.
A total number of 450,000  additional  shares (taking into account the Company's 1:1 stock dividend paid in October 1997) authorized
under the 1994 Stock Option Plan were previously  registered  pursuant to Form S-8  Registration  Statement No.  33-58259.  See also
"Explanatory  Note" below. Also includes an indeterminate  number of securities which may be issuable by reason of a reorganization,
recapitalization,  exchange of shares,  stock split,  combination  of shares or dividend  payable in shares of Common Stock or other
securities, as provided under the 1994 Stock Option Plan, as amended and restated.

(2) Pursuant to Rule 457(h) the offering price is calculated  based upon the average of the bid and asked prices of the Common Stock
as reported on the National Association of Securities Dealers Automated Quotation, National Market System on June 11, 1998.
</FN>
</TABLE>


<PAGE>
                                EXPLANATORY NOTE

     This Registration  Statement is filed pursuant to General  Instruction E of
Form S-8. A Form S-8 Registration Statement,  No. 33-58259, was previously filed
on March 24, 1995 to register a total of 646,604 shares of the common stock, par
value $1.00 per share (the "Common Stock"),  of Vermont Financial Services Corp.
(the "Company"),  of which 450,000 shares were authorized for issuance  pursuant
to options  granted or to be granted under the Company's  1994 Stock Option Plan
(the  "Plan").  These share  totals,  as well as the other  references  to share
totals  contained  elsewhere  in  this  Registration  Statement,  including  the
Prospectus  which  forms a part  of this  Registration  Statement,  reflect  the
Company's  1:1 stock  dividend  paid in October  1997.  On August 13, 1997,  the
Company's Board of Directors  approved the amendment and restatement of the Plan
(the "Amended  Plan"),  which,  among other  changes to the Plan,  increased the
total number of shares of Common Stock  previously  authorized under the Plan by
660,000 shares.  The Amended Plan was approved by the Company's  stockholders on
June 11, 1998. A total of 1,110,000  shares of Common Stock are  authorized  for
issuance  pursuant to options that may be granted under the Amended Plan,  which
includes all options previously granted under the Plan.

     This Registration  Statement,  in accordance with General  Instruction E of
Form  S-8,  incorporates  by  reference  the  contents  of the  prior  Form  S-8
Registration  Statement,  No.  33-58259,  referenced  above.  This  Registration
Statement  also  contains  a  Prospectus,   prepared  in  accordance   with  the
requirements  of Part I of Form S-3 (in accordance with Section C of the General
Instructions  to Form S-8),  which covers  re-offers and re-sales by the Selling
Shareholders  listed in the  Prospectus  of shares of the Common Stock that have
been or may be issued to certain directors and/or executive officers pursuant to
their  exercise of options  granted  under the Amended Plan,  including  options
previously granted under the Plan.


<PAGE>
Prospectus

                                 523,272 Shares
                            -------------------------

                        VERMONT FINANCIAL SERVICES CORP.

                            -------------------------

                                  COMMON STOCK
                           (Par Value $1.00 Per Share)
                            -------------------------

     This Prospectus is being used in connection with the offering, from time to
time, by certain shareholders (the "Selling  Shareholders") of Vermont Financial
Services Corp. (the "Company"), of up to 523,272 shares (the "Shares") of common
stock,  par value $1.00 per share (the "Common  Stock"),  of the Company,  which
have been or may be acquired pursuant to the exercise of options (the "Options")
granted to certain  directors  and  executives  of the Company under the Vermont
Financial  Services Corp.  1994 Stock Option Plan, as amended and restated as of
August 13, 1997 (the "Option  Plan"),  which includes  Options granted under the
Company's  1994  Stock  Option  Plan  prior to such  amendment  and  restatement
thereof.  The Company will not receive any of the proceeds  from the sale of the
Shares by the Selling Shareholders.

     The Shares may be sold from time to time by the Selling  Shareholders or by
pledgees, donees, transferees or other successors in interest. Such sales may be
made on the National  Association  of Securities  Dealers  Automated  Quotation,
National  Market  System  ("NMS") at prices and at terms then  prevailing  or at
prices related to the then current market price, or in negotiated  transactions.
All discounts,  commissions or fees incurred in connection  with the sale of the
Shares  offered  hereby  will  be  paid by the  Selling  Shareholders  or by the
purchasers of the Shares,  except that the expenses of preparing and filing this
Prospectus  and the  related  Registration  Statement  with the  Securities  and
Exchange  Commission  (the  "Commission"),  and of registering or qualifying the
Shares will be paid by the Company.

     The Selling  Shareholders and any broker executing selling orders on behalf
of the  Selling  Shareholders  may be deemed to be an  "underwriter"  within the
meaning of the Securities  Act of 1933, as amended (the  "Securities  Act"),  in
which event any discounts,  concessions,  or commissions received by such broker
may be deemed to be underwriting commissions under the Securities Act.

     The Common Stock is listed on the NMS. On June 11, 1998,  the closing price
of the Common Stock on the NMS was $26.865 per share.

  THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
   EXCHANGE COMMISSION, THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY STATE
    SECURITIES COMMISSION, NOR HAS THE COMMISSION, CORPORATION, OR ANY STATE
       SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
      PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 THE SHARES OF COMMON STOCK OFFERED BY THIS PROSPECTUS ARE NOT SAVINGS ACCOUNTS
  OR DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
       THE BANK INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR
           ANY OTHER GOVERNMENTAL AGENCY, AND INVOLVE INVESTMENT RISK,
                    INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.

                  The date of this Prospectus is June 12, 1998.


<PAGE>
     No  person  has  been  authorized  to give any  information  or to make any
representation  not contained in this  Prospectus,  and, if given or made,  such
information or representation  must not be relied upon as having been authorized
by the  Company.  This  Prospectus  does  not  constitute  an offer to sell or a
solicitation  of an offer to buy any  securities  other  than the  Common  Stock
offered by this  Prospectus or an offer to sell or a solicitation of an offer to
buy such Common Stock in any  jurisdiction  to any person to whom it is unlawful
to make such offer or solicitation in such jurisdiction. Neither the delivery of
this  Prospectus nor any sale made  hereunder  shall,  under any  circumstances,
create  any  implication  that  there has been no change in the  affairs  of the
Company or that the  information  herein is correct as of any time subsequent to
the date hereof.

                                TABLE OF CONTENTS

Section                                                                     Page

Available Information ....................................................   3

Incorporation of Certain Documents by Reference ..........................   3

The Company ..............................................................   4

Selling Shareholders .....................................................   4

Plan of Distribution .....................................................   6

Indemnification ..........................................................   6

Experts ..................................................................   7

Legal Matters ............................................................   7


                                        2
<PAGE>

                              AVAILABLE INFORMATION

     The Company is subject to the informational  requirements of the Securities
Exchange  Act of 1934,  as amended  (the  "Exchange  Act"),  and, in  accordance
therewith,  files reports,  proxy  statements,  and other  information  with the
Commission.  Such  reports,  proxy  statements,  and  other  information  can be
inspected  and  copied at the  public  reference  facilities  maintained  by the
Commission  at 450  Fifth  Street,  N.W.,  Washington,  D.C.  20549,  and at the
following  Regional Offices:  the Northeast  Regional Office,  Seven World Trade
Center,  Suite 1300, New York, New York 10048,  and the Midwest Regional Office,
Citicorp  Center,  500  West  Madison  Street,  Suite  1400,  Chicago,  Illinois
60661-2511.  Copies of such material can be obtained by written request from the
Public  Reference  Section  of  the  Commission  at  450  Fifth  Street,   N.W.,
Washington,  D.C. 20549. The Company files  electronically  with the Commission.
The Commisssion maintains a World Wide Web site (located at  http://www.sec.gov)
that contains  reports,  proxy and information  statements and other information
regarding registrants that file electronically with the Commission.

     A  registration  statement  on Form  S-8,  together  with  all  amendments,
exhibits and  documents  incorporated  therein by reference  (the  "Registration
Statement"),  has been filed with the Commission,  Washington,  D.C.,  under the
Securities  Act,  with respect to the Shares  offered by this  Prospectus.  This
Prospectus does not contain all the  information  set forth in the  Registration
Statement,  certain parts of which are omitted in accordance  with the rules and
regulations of the Commission.  Statements in this Prospectus as to the contents
of exhibits are not necessarily complete, and each statement is qualified in all
respects  by  reference  to the copies of  documents  filed or  incorporated  by
reference as exhibits to the Registration  Statement or otherwise filed with the
Commission. See also "Incorporation of Certain Documents by Reference."

                 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

     The following documents (or parts thereof) filed with the Commission by the
Company are incorporated by reference in this Prospectus:

     (a)  The  Company's  Annual Report on Form 10-K, as amended on Form 10-K/A,
          for the year ended December 31, 1997;

     (b)  The  Company's  Quarterly  Report on Form 10-Q for the  quarter  ended
          March 31, 1998; and

     (c)  The  description  of the  Common  Stock  contained  in  the  Company's
          Prospectus dated April 18, 1997 and filed with the Commission pursuant
          to Rule 424(b) (File No. 333-21023).

     All documents filed by the Company  pursuant to Sections  13(a),  13(c), or
15(d) of the  Exchange  Act after the date of this  Prospectus  and prior to the
filing of a post-effective  amendment  indicating that all of the Shares offered
hereby have been sold, or  deregistering  all of the Shares that, at the time of
such post-effective amendment, remain unsold, shall be deemed to be incorporated
by reference in this  Prospectus and to be a part hereof from the date of filing
of  such  documents.   Any  statement   contained  herein  or  in  any  document
incorporated  by reference  herein which is deemed to be modified or superseded,
shall not be deemed,  except as so modified or superseded,  to constitute a part
of this Prospectus.

     The Company  shall  furnish  without  charge to each person,  including any
beneficial  owner,  to whom a copy of this  Prospectus  is  delivered,  upon the
written or oral  request of such person,  copies of any or all of the  documents
which  are  incorporated  by  reference  herein  (other  than  exhibits  to such
documents,  unless such exhibits are specifically incorporated by reference into
such  documents).  Written  requests  for such  documents  should be directed to
Vermont Financial Services Corp., 100 Main Street,  Brattleboro,  Vermont 05301,
Attention: Treasurer. Telephone requests may be directed to (802) 257-7151.

                                        3
<PAGE>
                                   THE COMPANY

General

     Vermont Financial Services Corp., a Delaware corporation,  was organized in
1990 and became the  successor of VFSC  Vermont on April 17, 1990  pursuant to a
merger of VFSC  Vermont  into the  Company.  The merger was  carried out for the
purpose  of  changing  the  Company's  state of  incorporation  from  Vermont to
Delaware.  The  Company  is a bank  holding  company  and has  two  wholly-owned
subsidiaries, Vermont National Bank, a national banking association ("VNB"), and
United Bank ("UB" and together with VNB, the "Banks"), a Massachusetts chartered
stock savings bank. VNB conducts business through 42 branch offices located in 9
of Vermont's  14  counties,  including  the cities of  Brattleboro,  Burlington,
Rutland and  Montpelier,  and 16 offices  located in four of New  Hampshire's 10
counties  situated in the southeastern  part of the state. UB conducts  business
through seven branch offices in Western Massachusetts.  The principal offices of
the  Company  (and VNB) are  located at 100 Main  Street,  Brattleboro,  Vermont
05301.  The  Company's  telephone  number  is (802)  257-7151.  VNB  engages  in
commercial and retail banking and in the trust business, including the taking of
deposits, the making of secured and unsecured loans, the financing of commercial
transactions,  and the  performance  of  corporate,  pension and personal  trust
services.  UB is engaged in the business of attracting deposits from the general
public and originating  residential mortgage loans. UB also makes mortgage loans
on commercial real estate and originates consumer loans.

     The  Company,  VNB and UB are  subject  to  federal,  state and local  laws
applicable  to banks and bank holding  companies and to the  regulations  of the
Board of Governors of the Federal Reserve System,  the Federal Deposit Insurance
Corporation,  the  Comptroller  of the  Currency  (in the  case of VNB)  and the
Massachusetts Commissioner of Banks (in the case of UB).

Property

     Of the 65 full service branch offices  operated by the Banks, 37 are owned,
21 are leased  directly  from  independent  third  parties as lessors  and seven
buildings are owned but situated on leased land.

Competition

     The  Banks  compete  on the  local  and  the  regional  levels  with  other
commercial banks and financial institutions for all types of deposits, loans and
trust accounts.  Current principal  competitors  include  metropolitan banks and
financial  institutions based in southern New England and New York City, many of
which have greater  financial  resources.  The continuing  consolidation  of the
banking  industry,  together  with changes in  interstate  banking and branching
laws,  increases the likelihood that the Banks will face increasing  competition
from national as well as regional competitors.

     In the retail  market for  financial  services,  competitors  include other
banks, credit unions, finance companies,  thrift institutions and, increasingly,
brokerage firms, insurance companies, and mortgage loan companies.

     In the personal and commercial trust business,  competitors  include mutual
funds, insurance companies and investment advisory firms.

Employees

     As of  December  31,  1997,  the  Company  and  its  subsidiaries  employed
approximately 1,040 persons (full-time equivalent).

                              SELLING SHAREHOLDERS

     The following table sets forth:  (i) the name of each Selling  Shareholder,
(ii) his or her position(s)  with the Company and its predecessor or affiliates,
over the last three years,  (iii) the number of shares of Common Stock owned (or
subject  to  option)  by  each  Selling  Shareholder  as of  the  date  of  this
Prospectus,  (iv) the number of shares of Common Stock which,  as of the date of
this Prospectus,  may be offered for the account of each Selling  Shareholder by
this  Prospectus  and (v) the  amount of the  class to be owned by each  Selling
Shareholder if such Selling Shareholder were to sell all of the shares of Common
Stock  covered by this  Prospectus.  There can be no  assurance  that any of the
Selling  Shareholders  will  offer  for  sale or sell  any or all of the  Shares
offered by them pursuant to this Prospectus.


                                        4
<PAGE>
<TABLE>
<CAPTION>
                                                                                                                      Shares Owned
                                                                                   Shares Owned        Number of         Following
                                                                                   Prior to This     Shares to be      Completion of
Name                    Position with Company                                        Offering*          Offered         Offering *
----------------------  -------------------------------------------------------- ----------------- ----------------- ---------------
<S>                    <C>                                                        <C>               <C>                <C>
John D. Hashagen, Jr.   President and Chief Executive Officer and Director of      180,796(1.36%)    147,600(1.11%)       33,196**
                        Company and VNB
Richard O. Madden       Executive Vice President, Chief Financial Officer,          56,812**          50,200**             6,612**
                        Treasurer and Secretary of the Company; Executive 
                        Vice President and Chief Financial Officer of VNB
Louis J. Dunham         Executive Vice President of the Company; Executive          68,993**          58,200**            10,793**
                        Vice presient and Senior Credit Officer of VNB
Robert G. Soucy         Executive Vice President of the Company and VNB             89,517**          69,000**            20,517**
W. Bruce Fenn           Executive Vice President of the Company and VNB             41,322**          27,200**            14,122**
Anthony F. Abatiell     Director of the Company and VNB                            127,748**          10,000**           117,748**
Zane V. Akins           Director of the Company and VNB                              7,843**           4,000**             3,843**
Charles A. Cairns       Director of the Company and VNB                             18,948**          10,000**             8,948**
William P. Cody         Director of the Company and VNB                              7,885**           6,000**             1,885**
Allyn W. Coombs         Director of the Company and VNB                             30,380**           8,000**            22,380**
Philip M. Drumheller    Director of the Company and VNB                              8,500**           6,000**             2,500**
John K. Dwight          Director of the Company and VNB                             26,058**          14,648**            11,410**
Francis L. Lemay        Director of the Company and VNB; Chairman of UB            212,966(1.60%)     57,000**        155,966(1.17%)
Stephan A. Morse        Director of the Company and VNB                             22,696**          10,000**            12,696**
Roger M. Pike           Director of the Company and VNB                             22,588**          10,000**            12,588**
Ernest R. Pomerleau     Director of the Company and VNB                             23,428**          14,648**             8,780**
Mark W. Richards        Director of the Company and VNB                             66,017**          10,000**            56,017**
James M. Sutton         Director of the Company and VNB                            384,802(2.90%)     10,776**        374,026(2.82%)
---------
<FN>
*    =   For  purposes of this table,  the number of shares  owned prior to this  registration  includes all shares which would be
         owned if all options granted under the Option Plan or any other plan of the Company were exercised.
**   =   Less than one percent.
</FN>
</TABLE>
                                                                  5

<PAGE>

                              PLAN OF DISTRIBUTION

       The sales of the Shares by the Selling Shareholders may be effected, from
time to time,  on the NMS or on any stock  exchange  on which the  Shares may be
listed at the time of sale, in negotiated transactions, or through a combination
of such methods of sale, at fixed prices which may be changed,  at market prices
prevailing  at the time of sale,  at prices  related to such  prevailing  market
prices,  or at  negotiated  prices.  The  Selling  Shareholders  may effect such
transactions  by  selling  Shares  to  or  through   broker-dealers,   and  such
broker-dealers may receive  compensation in the form of discounts,  concessions,
or commissions from the Selling Shareholders and/or the purchasers of Shares for
whom such broker-dealers may act as agent or to whom they sell as principal,  or
both (which compensation as to a particular  broker-dealer might be in excess of
customary commissions).

       The Selling  Shareholders and any  broker-dealers  that act in connection
with the sale of the  Shares  hereunder  might be  deemed  to be  "Underwriters"
within the  meaning of Section  2(11) of the  Securities  Act;  any  commissions
received by them and any profit  realized on the resale of Shares as  principals
might be deemed to be underwriting compensation under the Securities Act.

       Any  broker-dealer  acquiring Shares from a Selling  Shareholder may sell
the Shares either directly, in its normal market-making  activities,  through or
to other brokers on a principal or agency basis,  or to its customers.  Any such
sales may be at prices then  prevailing  on the NMS,  at prices  related to such
prevailing  market prices,  at negotiated  prices,  or at prices  reflecting the
application of a combination of such methods.

       The Company has advised the Selling  Shareholders that  anti-manipulative
Rules  10b-5,  10b-6 and 10b-7  promulgated  under the Exchange Act may apply to
their sales in the market.  The Company has furnished  the Selling  Shareholders
with copies of these rules,  and has informed  the Selling  Shareholders  of the
possible need for them to deliver copies of this  Prospectus in connection  with
their resales of the Shares. The Selling  Shareholders may indemnify any broker-
dealer that  participates in  transactions  involving sale of the Shares against
certain liabilities, including liabilities arising under the Securities Act. Any
commissions  paid or any  discounts or  concessions  allowed to any such broker-
dealers,  and, if any such  broker-dealer  purchases shares as a principal,  any
profits  received on the resale of such Shares may be deemed to be  underwriting
discounts and commissions under the Securities Act.

       Upon the Company's  being notified by any Selling  Shareholders  that any
material  arrangement has been entered into with a broker-dealer for the sale of
Shares through a cross or block trade, a supplemental  prospectus  will be filed
under  Rule  424(c)  under the  Securities  Act,  setting  forth the name of the
participating  broker-dealer(s),  the  number of shares  involved,  the price at
which such Shares were sold by the Selling Shareholder,  the commissions paid or
discounts  or   concessions   allowed  by  the  Selling   Shareholder   to  such
broker-dealer(s),  and where  applicable,  that such  broker-dealer(s),  did not
conduct any investigation to verify the information set out in this Prospectus.

       Any Shares  which  qualify for resale  pursuant  to Rule 144  promulgated
under the Securities Act may be sold under the Rule rather than pursuant to this
Prospectus.

       There can be no assurance that the Selling  Shareholders will sell all or
even any of the Shares which may be offered by them or any of them hereunder.

                                 INDEMNIFICATION

       Section  145  of  the  Delaware  General  Corporation  Law  (the  "DGCL")
provides, in effect, that any person made a party to any action by reason of the
fact that he is or was a director, officer, employee or agent of the Company may
and, in certain cases,  must be indemnified by the Company against,  in the case
of a non-derivative  action,  judgments,  fines,  amounts paid in settlement and
reasonable expenses (including  attorney's fees), if in either type of action he
acted in good  faith  and in a manner  he  reasonably  believed  to be in or not
opposed to the best  interests of the Company and, in a  non-derivative  action,
which  involves a criminal  proceeding,  in which such person had no  reasonable
cause to believe his conduct was unlawful.  This indemnification does not apply,
in a derivative action, to matters as to which it is adjudged that the director,
officer,  employee or agent is liable to the Company, unless upon court order it
is determined that,  despite such adjudication of liability,  but in view of all
the  circumstances  of  the  case,  he is  fairly  and  reasonably  entitled  to
indemnity.

       Insofar as indemnification  for liabilities  arising under the Securities
Act may be permitted to Directors,  officers, or persons controlling the Company
pursuant to the foregoing provisions,  the Company has been informed that in the
opinion of the SEC

                                        6
<PAGE>

such  indemnification,  in the  event of any such  actual  liability  under  the
Securities  Act, is against public policy as expressed in the Securities Act and
is therefore unenforceable.

       Article Nine of the Company's Certificate of Incorporation states that no
director of the Company shall be liable to the Company or its  stockholders  for
monetary  damages  for breach of  fiduciary  duty as a  director,  except to the
extent that  exculpation  from  liability is not permitted  under the DGCL as in
effect when such breach occurred.

                                     EXPERTS

     The financial statements of the Company as of December 31, 1997 and for the
year  then  ended  have  been  incorporated  by  reference  in the  Registration
Statement  and this  Prospectus in reliance upon the report of KPMG Peat Marwick
LLP, independent certified public accountants,  incorporated by reference in the
Registration Statement and this Prospectus,  and upon the authority of said firm
as experts in accounting and auditing.

     The  consolidated  balance sheet of the Company as of December 31, 1996 and
the related  consolidated  statements of  operations,  changes in  stockholders'
equity and cash flows for each of the two years in the period ended December 31,
1996  included in the  Company's  1997 Annual  Report on Form 10-K,  as amended,
incorporated  by reference in the  Registration  Statement and this  Prospectus,
have been  incorporated  herein in  reliance  on the report of Coopers & Lybrand
L.L.P.,  independent accountant,  given on the authority of that firm as experts
in accounting and auditing.

                                  LEGAL MATTERS

       The validity of the Common Stock  offered  hereby will be passed upon for
the Company by Sullivan & Worcester LLP, Boston, Massachusetts.


                                        7
<PAGE>

                                    EXHIBITS

The  following  exhibits are  furnished  in  connection  with this  Registration
Statement:

5      Opinion of Sullivan & Worcester LLP      

23.1   Consent of KPMG Peat Marwick LLP

23.2   Consent of Coopers & Lybrand L.L.P.

23.3   Consent of Sullivan & Worcester LLP (contained in Exhibit 5)

24     Power of Attorney (included on signature pages)



                                      II-1

<PAGE>
                                   SIGNATURES

       Pursuant  to  the  requirements  of  the  Securities  Act  of  1933,  the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized,  in the City of  Brattleboro,  State of Vermont,  on the 12th day of
June, 1998.

                                    VERMONT FINANCIAL SERVICES CORP.


                                    By:  /s/ John D. Hashagen, Jr.
                                         John D. Hashagen, Jr.
                                         President and Chief Executive Officer

     The undersigned  Officers and Directors of Vermont Financial Services Corp.
hereby  severally  constitute John D. Hashagen,  Jr. and Richard O. Madden,  and
each of them, acting singly, our true and lawful attorneys to sign for us and in
our names in the capacities indicated below the Company's Registration Statement
on Form S-8 and any and all amendments and supplements  thereto,  filed with the
Securities and Exchange Commission, granting unto each of said attorneys, acting
singly,  full power and authority to do and perform each and every act and thing
requisite  or necessary  to be done in and about the  premises,  as fully to all
intents and  purposes as he might or could do in person,  hereby  ratifying  and
confirming  our  signatures to said  registration  statement  signed by our said
attorneys and all else that said  attorneys may lawfully do and cause to be done
by virtue hereof.

       Pursuant  to  the  requirements  of the  Securities  Act  of  1933,  this
Registration  Statement has been signed below by the following persons on behalf
of the Company and in the capacities and on the dates indicated.


       Signatures                    Capacity                          Date
       ----------                    --------                          ----

 /s/ John D. Hashagen, Jr.        President, Chief Executive       June 12, 1998
John D. Hashagen, Jr.             Officer and Director



 /s/ Richard O. Madden            Executive Vice President,        June 12, 1998
Richard O. Madden                 Treasurer and  Chief Financial 
                                  Officer (principal accounting 
                                  officer)



 /s/ Anthony F. Abatiell          Director                         June 12, 1998
Anthony F. Abatiell



 /s/ Zane V. Akins                Director                         June 12, 1998
Zane V. Akins



                                  Director                         June 12, 1998
Charles A. Cairns



                                      II-2

<PAGE>


 /s/ William P. Cody              Director                         June 12, 1998
William P. Cody



 /s/ Allyn W. Coombs              Director                         June 12, 1998
Allyn W. Coombs



 /s/ Philip M Drumheller          Director                         June 12, 1998
Philip M. Drumheller



 /s/ John K. Dwight               Director                         June 12, 1998
John K. Dwight



 /s/ Francis L. Lemay             Director                         June 12, 1998
Francis L. Lemay



 /s/ Stephan A. Morse             Director                         June 12, 1998
Stephan A. Morse



 /s/ Roger M. Pike                Director                         June 12, 1998
Roger M. Pike



 /s/ Ernest R. Pomerleau          Director                         June 12, 1998
Ernest R. Pomerleau



 /s/ Mark W. Richards             Director                         June 12, 1998
Mark W. Richards



 /s/ James M. Sutton              Director                         June 12, 1998
James M. Sutton




                                      II-3
[{"type": "S-8", "sequence": "1", "secsgml_size_bytes": 34941}]
{"company-data": {"conformed-name": "VERMONT FINANCIAL SERVICES CORP", "cik": "0000706116", "assigned-sic": "6022", "irs-number": "030284445", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-56745", "film-number": "98647456"}, "business-address": {"street1": "100 MAIN ST", "city": "BRATTLEBORO", "state": "VT", "zip": "05301", "phone": "8022585233"}, "mail-address": {"street1": "100 MAIN STREET", "city": "BRATTLEBORO", "state": "UT", "zip": "05301"}}
As filed with the Securities and Exchange Commission on June 12, 1998
                                                  Registration No. 333-

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                         -------------------------------

                                    FORM S-8
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933

                        VERMONT FINANCIAL SERVICES CORP.
             (Exact name of Registrant as Specified in Its Charter)

        Delaware                                            03-0284445
(State or other jurisdiction of                        (I.R.S. Employer  
incorporation or organization)                         Identification No.)

                                 100 Main Street
                           Brattleboro, Vermont 05301
                    (Address of Principal Executive Offices)

             Vermont Financial Services Corp. 1994 Stock Option Plan
                 (as amended and restated as of August 13, 1997)
                            (Full Title of the Plan)

                              JOHN D. HASHAGEN, JR.
                      President and Chief Executive Officer
                        Vermont Financial Services Corp.
                                 100 Main Street
                           Brattleboro, Vermont 05301
                     (Name and Address of Agent For Service)

                                 (802) 257-7151
          (Telephone number, including area code, of agent for service)

                                    Copy to:
                             STEPHEN J. COUKOS, ESQ.
                            Sullivan & Worcester LLP
                             One Post Office Square
                           Boston, Massachusetts 02109
CALCULATION OF REGISTRATION FEE

                                                                  Proposed Maximum          Proposed Maximum
                                                Amount to be     Offering Price Per        Aggregate Offering          Amount of
  Title of Securities to be Registered           Registered            Share                     Price             Registration Fee
Common Stock, $1.00 par value                   660,000 (1)          $26.865 (2)              $17,730,900 (2)          $5,230.62
(1) Represents the additional number of shares of Common Stock authorized under the 1994 Stock Option Plan, as amended and restated.
A total number of 450,000  additional  shares (taking into account the Company's 1:1 stock dividend paid in October 1997) authorized
under the 1994 Stock Option Plan were previously  registered  pursuant to Form S-8  Registration  Statement No.  33-58259.  See also
"Explanatory  Note" below. Also includes an indeterminate  number of securities which may be issuable by reason of a reorganization,
recapitalization,  exchange of shares,  stock split,  combination  of shares or dividend  payable in shares of Common Stock or other
securities, as provided under the 1994 Stock Option Plan, as amended and restated.

(2) Pursuant to Rule 457(h) the offering price is calculated  based upon the average of the bid and asked prices of the Common Stock
as reported on the National Association of Securities Dealers Automated Quotation, National Market System on June 11, 1998.
EXPLANATORY NOTE

     This Registration  Statement is filed pursuant to General  Instruction E of
Form S-8. A Form S-8 Registration Statement,  No. 33-58259, was previously filed
on March 24, 1995 to register a total of 646,604 shares of the common stock, par
value $1.00 per share (the "Common Stock"),  of Vermont Financial Services Corp.
(the "Company"),  of which 450,000 shares were authorized for issuance  pursuant
to options  granted or to be granted under the Company's  1994 Stock Option Plan
(the  "Plan").  These share  totals,  as well as the other  references  to share
totals  contained  elsewhere  in  this  Registration  Statement,  including  the
Prospectus  which  forms a part  of this  Registration  Statement,  reflect  the
Company's  1:1 stock  dividend  paid in October  1997.  On August 13, 1997,  the
Company's Board of Directors  approved the amendment and restatement of the Plan
(the "Amended  Plan"),  which,  among other  changes to the Plan,  increased the
total number of shares of Common Stock  previously  authorized under the Plan by
660,000 shares.  The Amended Plan was approved by the Company's  stockholders on
June 11, 1998. A total of 1,110,000  shares of Common Stock are  authorized  for
issuance  pursuant to options that may be granted under the Amended Plan,  which
includes all options previously granted under the Plan.

     This Registration  Statement,  in accordance with General  Instruction E of
Form  S-8,  incorporates  by  reference  the  contents  of the  prior  Form  S-8
Registration  Statement,  No.  33-58259,  referenced  above.  This  Registration
Statement  also  contains  a  Prospectus,   prepared  in  accordance   with  the
requirements  of Part I of Form S-3 (in accordance with Section C of the General
Instructions  to Form S-8),  which covers  re-offers and re-sales by the Selling
Shareholders  listed in the  Prospectus  of shares of the Common Stock that have
been or may be issued to certain directors and/or executive officers pursuant to
their  exercise of options  granted  under the Amended Plan,  including  options
previously granted under the Plan.
Prospectus

                                 523,272 Shares
                            -------------------------

                        VERMONT FINANCIAL SERVICES CORP.

                            -------------------------

                                  COMMON STOCK
                           (Par Value $1.00 Per Share)
                            -------------------------

     This Prospectus is being used in connection with the offering, from time to
time, by certain shareholders (the "Selling  Shareholders") of Vermont Financial
Services Corp. (the "Company"), of up to 523,272 shares (the "Shares") of common
stock,  par value $1.00 per share (the "Common  Stock"),  of the Company,  which
have been or may be acquired pursuant to the exercise of options (the "Options")
granted to certain  directors  and  executives  of the Company under the Vermont
Financial  Services Corp.  1994 Stock Option Plan, as amended and restated as of
August 13, 1997 (the "Option  Plan"),  which includes  Options granted under the
Company's  1994  Stock  Option  Plan  prior to such  amendment  and  restatement
thereof.  The Company will not receive any of the proceeds  from the sale of the
Shares by the Selling Shareholders.

     The Shares may be sold from time to time by the Selling  Shareholders or by
pledgees, donees, transferees or other successors in interest. Such sales may be
made on the National  Association  of Securities  Dealers  Automated  Quotation,
National  Market  System  ("NMS") at prices and at terms then  prevailing  or at
prices related to the then current market price, or in negotiated  transactions.
All discounts,  commissions or fees incurred in connection  with the sale of the
Shares  offered  hereby  will  be  paid by the  Selling  Shareholders  or by the
purchasers of the Shares,  except that the expenses of preparing and filing this
Prospectus  and the  related  Registration  Statement  with the  Securities  and
Exchange  Commission  (the  "Commission"),  and of registering or qualifying the
Shares will be paid by the Company.

     The Selling  Shareholders and any broker executing selling orders on behalf
of the  Selling  Shareholders  may be deemed to be an  "underwriter"  within the
meaning of the Securities  Act of 1933, as amended (the  "Securities  Act"),  in
which event any discounts,  concessions,  or commissions received by such broker
may be deemed to be underwriting commissions under the Securities Act.

     The Common Stock is listed on the NMS. On June 11, 1998,  the closing price
of the Common Stock on the NMS was $26.865 per share.

  THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
   EXCHANGE COMMISSION, THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY STATE
    SECURITIES COMMISSION, NOR HAS THE COMMISSION, CORPORATION, OR ANY STATE
       SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
      PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 THE SHARES OF COMMON STOCK OFFERED BY THIS PROSPECTUS ARE NOT SAVINGS ACCOUNTS
  OR DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
       THE BANK INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR
           ANY OTHER GOVERNMENTAL AGENCY, AND INVOLVE INVESTMENT RISK,
                    INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.

                  The date of this Prospectus is June 12, 1998.
No  person  has  been  authorized  to give any  information  or to make any
representation  not contained in this  Prospectus,  and, if given or made,  such
information or representation  must not be relied upon as having been authorized
by the  Company.  This  Prospectus  does  not  constitute  an offer to sell or a
solicitation  of an offer to buy any  securities  other  than the  Common  Stock
offered by this  Prospectus or an offer to sell or a solicitation of an offer to
buy such Common Stock in any  jurisdiction  to any person to whom it is unlawful
to make such offer or solicitation in such jurisdiction. Neither the delivery of
this  Prospectus nor any sale made  hereunder  shall,  under any  circumstances,
create  any  implication  that  there has been no change in the  affairs  of the
Company or that the  information  herein is correct as of any time subsequent to
the date hereof.

                                TABLE OF CONTENTS

Section                                                                     Page

Available Information ....................................................   3

Incorporation of Certain Documents by Reference ..........................   3

The Company ..............................................................   4

Selling Shareholders .....................................................   4

Plan of Distribution .....................................................   6

Indemnification ..........................................................   6

Experts ..................................................................   7

Legal Matters ............................................................   7

                                        2
AVAILABLE INFORMATION

     The Company is subject to the informational  requirements of the Securities
Exchange  Act of 1934,  as amended  (the  "Exchange  Act"),  and, in  accordance
therewith,  files reports,  proxy  statements,  and other  information  with the
Commission.  Such  reports,  proxy  statements,  and  other  information  can be
inspected  and  copied at the  public  reference  facilities  maintained  by the
Commission  at 450  Fifth  Street,  N.W.,  Washington,  D.C.  20549,  and at the
following  Regional Offices:  the Northeast  Regional Office,  Seven World Trade
Center,  Suite 1300, New York, New York 10048,  and the Midwest Regional Office,
Citicorp  Center,  500  West  Madison  Street,  Suite  1400,  Chicago,  Illinois
60661-2511.  Copies of such material can be obtained by written request from the
Public  Reference  Section  of  the  Commission  at  450  Fifth  Street,   N.W.,
Washington,  D.C. 20549. The Company files  electronically  with the Commission.
The Commisssion maintains a World Wide Web site (located at  http://www.sec.gov)
that contains  reports,  proxy and information  statements and other information
regarding registrants that file electronically with the Commission.

     A  registration  statement  on Form  S-8,  together  with  all  amendments,
exhibits and  documents  incorporated  therein by reference  (the  "Registration
Statement"),  has been filed with the Commission,  Washington,  D.C.,  under the
Securities  Act,  with respect to the Shares  offered by this  Prospectus.  This
Prospectus does not contain all the  information  set forth in the  Registration
Statement,  certain parts of which are omitted in accordance  with the rules and
regulations of the Commission.  Statements in this Prospectus as to the contents
of exhibits are not necessarily complete, and each statement is qualified in all
respects  by  reference  to the copies of  documents  filed or  incorporated  by
reference as exhibits to the Registration  Statement or otherwise filed with the
Commission. See also "Incorporation of Certain Documents by Reference."

                 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

     The following documents (or parts thereof) filed with the Commission by the
Company are incorporated by reference in this Prospectus:

     (a)  The  Company's  Annual Report on Form 10-K, as amended on Form 10-K/A,
          for the year ended December 31, 1997;

     (b)  The  Company's  Quarterly  Report on Form 10-Q for the  quarter  ended
          March 31, 1998; and

     (c)  The  description  of the  Common  Stock  contained  in  the  Company's
          Prospectus dated April 18, 1997 and filed with the Commission pursuant
          to Rule 424(b) (File No. 333-21023).

     All documents filed by the Company  pursuant to Sections  13(a),  13(c), or
15(d) of the  Exchange  Act after the date of this  Prospectus  and prior to the
filing of a post-effective  amendment  indicating that all of the Shares offered
hereby have been sold, or  deregistering  all of the Shares that, at the time of
such post-effective amendment, remain unsold, shall be deemed to be incorporated
by reference in this  Prospectus and to be a part hereof from the date of filing
of  such  documents.   Any  statement   contained  herein  or  in  any  document
incorporated  by reference  herein which is deemed to be modified or superseded,
shall not be deemed,  except as so modified or superseded,  to constitute a part
of this Prospectus.

     The Company  shall  furnish  without  charge to each person,  including any
beneficial  owner,  to whom a copy of this  Prospectus  is  delivered,  upon the
written or oral  request of such person,  copies of any or all of the  documents
which  are  incorporated  by  reference  herein  (other  than  exhibits  to such
documents,  unless such exhibits are specifically incorporated by reference into
such  documents).  Written  requests  for such  documents  should be directed to
Vermont Financial Services Corp., 100 Main Street,  Brattleboro,  Vermont 05301,
Attention: Treasurer. Telephone requests may be directed to (802) 257-7151.

                                        3
THE COMPANY

General

     Vermont Financial Services Corp., a Delaware corporation,  was organized in
1990 and became the  successor of VFSC  Vermont on April 17, 1990  pursuant to a
merger of VFSC  Vermont  into the  Company.  The merger was  carried out for the
purpose  of  changing  the  Company's  state of  incorporation  from  Vermont to
Delaware.  The  Company  is a bank  holding  company  and has  two  wholly-owned
subsidiaries, Vermont National Bank, a national banking association ("VNB"), and
United Bank ("UB" and together with VNB, the "Banks"), a Massachusetts chartered
stock savings bank. VNB conducts business through 42 branch offices located in 9
of Vermont's  14  counties,  including  the cities of  Brattleboro,  Burlington,
Rutland and  Montpelier,  and 16 offices  located in four of New  Hampshire's 10
counties  situated in the southeastern  part of the state. UB conducts  business
through seven branch offices in Western Massachusetts.  The principal offices of
the  Company  (and VNB) are  located at 100 Main  Street,  Brattleboro,  Vermont
05301.  The  Company's  telephone  number  is (802)  257-7151.  VNB  engages  in
commercial and retail banking and in the trust business, including the taking of
deposits, the making of secured and unsecured loans, the financing of commercial
transactions,  and the  performance  of  corporate,  pension and personal  trust
services.  UB is engaged in the business of attracting deposits from the general
public and originating  residential mortgage loans. UB also makes mortgage loans
on commercial real estate and originates consumer loans.

     The  Company,  VNB and UB are  subject  to  federal,  state and local  laws
applicable  to banks and bank holding  companies and to the  regulations  of the
Board of Governors of the Federal Reserve System,  the Federal Deposit Insurance
Corporation,  the  Comptroller  of the  Currency  (in the  case of VNB)  and the
Massachusetts Commissioner of Banks (in the case of UB).

Property

     Of the 65 full service branch offices  operated by the Banks, 37 are owned,
21 are leased  directly  from  independent  third  parties as lessors  and seven
buildings are owned but situated on leased land.

Competition

     The  Banks  compete  on the  local  and  the  regional  levels  with  other
commercial banks and financial institutions for all types of deposits, loans and
trust accounts.  Current principal  competitors  include  metropolitan banks and
financial  institutions based in southern New England and New York City, many of
which have greater  financial  resources.  The continuing  consolidation  of the
banking  industry,  together  with changes in  interstate  banking and branching
laws,  increases the likelihood that the Banks will face increasing  competition
from national as well as regional competitors.

     In the retail  market for  financial  services,  competitors  include other
banks, credit unions, finance companies,  thrift institutions and, increasingly,
brokerage firms, insurance companies, and mortgage loan companies.

     In the personal and commercial trust business,  competitors  include mutual
funds, insurance companies and investment advisory firms.

Employees

     As of  December  31,  1997,  the  Company  and  its  subsidiaries  employed
approximately 1,040 persons (full-time equivalent).

                              SELLING SHAREHOLDERS

     The following table sets forth:  (i) the name of each Selling  Shareholder,
(ii) his or her position(s)  with the Company and its predecessor or affiliates,
over the last three years,  (iii) the number of shares of Common Stock owned (or
subject  to  option)  by  each  Selling  Shareholder  as of  the  date  of  this
Prospectus,  (iv) the number of shares of Common Stock which,  as of the date of
this Prospectus,  may be offered for the account of each Selling  Shareholder by
this  Prospectus  and (v) the  amount of the  class to be owned by each  Selling
Shareholder if such Selling Shareholder were to sell all of the shares of Common
Stock  covered by this  Prospectus.  There can be no  assurance  that any of the
Selling  Shareholders  will  offer  for  sale or sell  any or all of the  Shares
offered by them pursuant to this Prospectus.

                                        4
Shares Owned
                                                                                   Shares Owned        Number of         Following
                                                                                   Prior to This     Shares to be      Completion of
Name                    Position with Company                                        Offering*          Offered         Offering *
----------------------  -------------------------------------------------------- ----------------- ----------------- ---------------
John D. Hashagen, Jr.   President and Chief Executive Officer and Director of      180,796(1.36%)    147,600(1.11%)       33,196**
                        Company and VNB
Richard O. Madden       Executive Vice President, Chief Financial Officer,          56,812**          50,200**             6,612**
                        Treasurer and Secretary of the Company; Executive 
                        Vice President and Chief Financial Officer of VNB
Louis J. Dunham         Executive Vice President of the Company; Executive          68,993**          58,200**            10,793**
                        Vice presient and Senior Credit Officer of VNB
Robert G. Soucy         Executive Vice President of the Company and VNB             89,517**          69,000**            20,517**
W. Bruce Fenn           Executive Vice President of the Company and VNB             41,322**          27,200**            14,122**
Anthony F. Abatiell     Director of the Company and VNB                            127,748**          10,000**           117,748**
Zane V. Akins           Director of the Company and VNB                              7,843**           4,000**             3,843**
Charles A. Cairns       Director of the Company and VNB                             18,948**          10,000**             8,948**
William P. Cody         Director of the Company and VNB                              7,885**           6,000**             1,885**
Allyn W. Coombs         Director of the Company and VNB                             30,380**           8,000**            22,380**
Philip M. Drumheller    Director of the Company and VNB                              8,500**           6,000**             2,500**
John K. Dwight          Director of the Company and VNB                             26,058**          14,648**            11,410**
Francis L. Lemay        Director of the Company and VNB; Chairman of UB            212,966(1.60%)     57,000**        155,966(1.17%)
Stephan A. Morse        Director of the Company and VNB                             22,696**          10,000**            12,696**
Roger M. Pike           Director of the Company and VNB                             22,588**          10,000**            12,588**
Ernest R. Pomerleau     Director of the Company and VNB                             23,428**          14,648**             8,780**
Mark W. Richards        Director of the Company and VNB                             66,017**          10,000**            56,017**
James M. Sutton         Director of the Company and VNB                            384,802(2.90%)     10,776**        374,026(2.82%)
---------
*    =   For  purposes of this table,  the number of shares  owned prior to this  registration  includes all shares which would be
         owned if all options granted under the Option Plan or any other plan of the Company were exercised.
**   =   Less than one percent.
5
PLAN OF DISTRIBUTION

       The sales of the Shares by the Selling Shareholders may be effected, from
time to time,  on the NMS or on any stock  exchange  on which the  Shares may be
listed at the time of sale, in negotiated transactions, or through a combination
of such methods of sale, at fixed prices which may be changed,  at market prices
prevailing  at the time of sale,  at prices  related to such  prevailing  market
prices,  or at  negotiated  prices.  The  Selling  Shareholders  may effect such
transactions  by  selling  Shares  to  or  through   broker-dealers,   and  such
broker-dealers may receive  compensation in the form of discounts,  concessions,
or commissions from the Selling Shareholders and/or the purchasers of Shares for
whom such broker-dealers may act as agent or to whom they sell as principal,  or
both (which compensation as to a particular  broker-dealer might be in excess of
customary commissions).

       The Selling  Shareholders and any  broker-dealers  that act in connection
with the sale of the  Shares  hereunder  might be  deemed  to be  "Underwriters"
within the  meaning of Section  2(11) of the  Securities  Act;  any  commissions
received by them and any profit  realized on the resale of Shares as  principals
might be deemed to be underwriting compensation under the Securities Act.

       Any  broker-dealer  acquiring Shares from a Selling  Shareholder may sell
the Shares either directly, in its normal market-making  activities,  through or
to other brokers on a principal or agency basis,  or to its customers.  Any such
sales may be at prices then  prevailing  on the NMS,  at prices  related to such
prevailing  market prices,  at negotiated  prices,  or at prices  reflecting the
application of a combination of such methods.

       The Company has advised the Selling  Shareholders that  anti-manipulative
Rules  10b-5,  10b-6 and 10b-7  promulgated  under the Exchange Act may apply to
their sales in the market.  The Company has furnished  the Selling  Shareholders
with copies of these rules,  and has informed  the Selling  Shareholders  of the
possible need for them to deliver copies of this  Prospectus in connection  with
their resales of the Shares. The Selling  Shareholders may indemnify any broker-
dealer that  participates in  transactions  involving sale of the Shares against
certain liabilities, including liabilities arising under the Securities Act. Any
commissions  paid or any  discounts or  concessions  allowed to any such broker-
dealers,  and, if any such  broker-dealer  purchases shares as a principal,  any
profits  received on the resale of such Shares may be deemed to be  underwriting
discounts and commissions under the Securities Act.

       Upon the Company's  being notified by any Selling  Shareholders  that any
material  arrangement has been entered into with a broker-dealer for the sale of
Shares through a cross or block trade, a supplemental  prospectus  will be filed
under  Rule  424(c)  under the  Securities  Act,  setting  forth the name of the
participating  broker-dealer(s),  the  number of shares  involved,  the price at
which such Shares were sold by the Selling Shareholder,  the commissions paid or
discounts  or   concessions   allowed  by  the  Selling   Shareholder   to  such
broker-dealer(s),  and where  applicable,  that such  broker-dealer(s),  did not
conduct any investigation to verify the information set out in this Prospectus.

       Any Shares  which  qualify for resale  pursuant  to Rule 144  promulgated
under the Securities Act may be sold under the Rule rather than pursuant to this
Prospectus.

       There can be no assurance that the Selling  Shareholders will sell all or
even any of the Shares which may be offered by them or any of them hereunder.

                                 INDEMNIFICATION

       Section  145  of  the  Delaware  General  Corporation  Law  (the  "DGCL")
provides, in effect, that any person made a party to any action by reason of the
fact that he is or was a director, officer, employee or agent of the Company may
and, in certain cases,  must be indemnified by the Company against,  in the case
of a non-derivative  action,  judgments,  fines,  amounts paid in settlement and
reasonable expenses (including  attorney's fees), if in either type of action he
acted in good  faith  and in a manner  he  reasonably  believed  to be in or not
opposed to the best  interests of the Company and, in a  non-derivative  action,
which  involves a criminal  proceeding,  in which such person had no  reasonable
cause to believe his conduct was unlawful.  This indemnification does not apply,
in a derivative action, to matters as to which it is adjudged that the director,
officer,  employee or agent is liable to the Company, unless upon court order it
is determined that,  despite such adjudication of liability,  but in view of all
the  circumstances  of  the  case,  he is  fairly  and  reasonably  entitled  to
indemnity.

       Insofar as indemnification  for liabilities  arising under the Securities
Act may be permitted to Directors,  officers, or persons controlling the Company
pursuant to the foregoing provisions,  the Company has been informed that in the
opinion of the SEC

                                        6
such  indemnification,  in the  event of any such  actual  liability  under  the
Securities  Act, is against public policy as expressed in the Securities Act and
is therefore unenforceable.

       Article Nine of the Company's Certificate of Incorporation states that no
director of the Company shall be liable to the Company or its  stockholders  for
monetary  damages  for breach of  fiduciary  duty as a  director,  except to the
extent that  exculpation  from  liability is not permitted  under the DGCL as in
effect when such breach occurred.

                                     EXPERTS

     The financial statements of the Company as of December 31, 1997 and for the
year  then  ended  have  been  incorporated  by  reference  in the  Registration
Statement  and this  Prospectus in reliance upon the report of KPMG Peat Marwick
LLP, independent certified public accountants,  incorporated by reference in the
Registration Statement and this Prospectus,  and upon the authority of said firm
as experts in accounting and auditing.

     The  consolidated  balance sheet of the Company as of December 31, 1996 and
the related  consolidated  statements of  operations,  changes in  stockholders'
equity and cash flows for each of the two years in the period ended December 31,
1996  included in the  Company's  1997 Annual  Report on Form 10-K,  as amended,
incorporated  by reference in the  Registration  Statement and this  Prospectus,
have been  incorporated  herein in  reliance  on the report of Coopers & Lybrand
L.L.P.,  independent accountant,  given on the authority of that firm as experts
in accounting and auditing.

                                  LEGAL MATTERS

       The validity of the Common Stock  offered  hereby will be passed upon for
the Company by Sullivan & Worcester LLP, Boston, Massachusetts.

                                        7
EXHIBITS

The  following  exhibits are  furnished  in  connection  with this  Registration
Statement:

5      Opinion of Sullivan & Worcester LLP      

23.1   Consent of KPMG Peat Marwick LLP

23.2   Consent of Coopers & Lybrand L.L.P.

23.3   Consent of Sullivan & Worcester LLP (contained in Exhibit 5)

24     Power of Attorney (included on signature pages)

                                      II-1
SIGNATURES

       Pursuant  to  the  requirements  of  the  Securities  Act  of  1933,  the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized,  in the City of  Brattleboro,  State of Vermont,  on the 12th day of
June, 1998.

                                    VERMONT FINANCIAL SERVICES CORP.

                                    By:  /s/ John D. Hashagen, Jr.
                                         John D. Hashagen, Jr.
                                         President and Chief Executive Officer

     The undersigned  Officers and Directors of Vermont Financial Services Corp.
hereby  severally  constitute John D. Hashagen,  Jr. and Richard O. Madden,  and
each of them, acting singly, our true and lawful attorneys to sign for us and in
our names in the capacities indicated below the Company's Registration Statement
on Form S-8 and any and all amendments and supplements  thereto,  filed with the
Securities and Exchange Commission, granting unto each of said attorneys, acting
singly,  full power and authority to do and perform each and every act and thing
requisite  or necessary  to be done in and about the  premises,  as fully to all
intents and  purposes as he might or could do in person,  hereby  ratifying  and
confirming  our  signatures to said  registration  statement  signed by our said
attorneys and all else that said  attorneys may lawfully do and cause to be done
by virtue hereof.

       Pursuant  to  the  requirements  of the  Securities  Act  of  1933,  this
Registration  Statement has been signed below by the following persons on behalf
of the Company and in the capacities and on the dates indicated.

       Signatures                    Capacity                          Date
       ----------                    --------                          ----

 /s/ John D. Hashagen, Jr.        President, Chief Executive       June 12, 1998
John D. Hashagen, Jr.             Officer and Director

 /s/ Richard O. Madden            Executive Vice President,        June 12, 1998
Richard O. Madden                 Treasurer and  Chief Financial 
                                  Officer (principal accounting 
                                  officer)

 /s/ Anthony F. Abatiell          Director                         June 12, 1998
Anthony F. Abatiell

 /s/ Zane V. Akins                Director                         June 12, 1998
Zane V. Akins

                                  Director                         June 12, 1998
Charles A. Cairns

                                      II-2
/s/ William P. Cody              Director                         June 12, 1998
William P. Cody

 /s/ Allyn W. Coombs              Director                         June 12, 1998
Allyn W. Coombs

 /s/ Philip M Drumheller          Director                         June 12, 1998
Philip M. Drumheller

 /s/ John K. Dwight               Director                         June 12, 1998
John K. Dwight

 /s/ Francis L. Lemay             Director                         June 12, 1998
Francis L. Lemay

 /s/ Stephan A. Morse             Director                         June 12, 1998
Stephan A. Morse

 /s/ Roger M. Pike                Director                         June 12, 1998
Roger M. Pike

 /s/ Ernest R. Pomerleau          Director                         June 12, 1998
Ernest R. Pomerleau

 /s/ Mark W. Richards             Director                         June 12, 1998
Mark W. Richards

 /s/ James M. Sutton              Director                         June 12, 1998
James M. Sutton

                                      II-3