Camouflage, and in particular background-matching, is one of the most common anti-predator strategies observed in nature. Animals can improve their match to the colour/pattern of their surroundings through background selection, and/or by plastic colour change. Colour change can occur rapidly (a few seconds), or it may be slow, taking hours to days. Many studies have explored the cues and mechanisms behind rapid colour change, but there is a considerable lack of information about slow colour change in the context of predation: the cues that initiate it, and the range of phenotypes that are produced. Here we show that peppered moth (Biston betularia) larvae respond to colour and luminance of the twigs they rest on, and exhibit a continuous reaction norm of phenotypes. When presented with a heterogeneous environment of mixed twig colours, individual larvae specialise crypsis towards one colour rather than developing an intermediate colour. Flexible colour change in this species has likely evolved in association with wind dispersal and polyphagy, which result in caterpillars settling and feeding in a diverse range of visual environments. This is the first example of visually induced slow colour change in Lepidoptera that has been objectively quantified and measured from the visual perspective of natural predators.