The design and performance of a new instrument, based on improved Penning ion guns [1] for etching and coating samples for SEM and LM in a single vacuum chamber, are described. The instrument is based on an existing high resolution ion beam coating system, which is capable of producing high quality ultra-thin and amorphous conductive films, required for present high resolution electron microscopes. [2]. The fact that in this system both etching and coating processes are combined in one chamber, the specimen handling and specimen contamination are minimized. Furthermore, the system eliminates the traditional multiple mounting /dismounting of samples to various holders for mechanical polishing, etching, coating and microscopy purposes. The specimen can stay with the same holder throughout the entire process, increasing the sample through-put. Moreover, the system offers an alternative method to the traditional “wet chemical etching,” technique with its well known problems.