A recent study of dynamical chiral symmetry breaking in N-flavour QED$_3$ at finite temperature is extended to include the effect of fermion wavefunction renormalisation in the Schwinger-Dyson equations. The simple ``zero-frequency truncation previously used is found to lead to unphysical results, especially as $T to 0$. A modified set of equations is proposed, whose solutions behave in a way which is qualitatively similar to the $T=0$ solutions of Pennington et al. [5-8] who have made extensive studies of the effect of wavefunction renormalisation in this context, and who concluded that there was no critical $N_c$ (at T=0) above which chiral symmetry was restored. In contrast, we find that our modified equations predict a critical $N_c$ at $T ot= 0$, and an $N-T$ phase diagram very similar to the earlier study neglecting wavefunction renormalisation. The reason for the difference is traced to the different infrared behaviour of the vacuum polarisation at $T=0$ and at $T ot= 0$.