The use of a diluted O-2/Ar atmosphere-for laser deposition of YBa2Cu3O7-x thin films results in a strong decrease of the surface outgrowth density as compared to deposition in pure O-2. The smoother films need a longer oxygenation period and show slightly lower critical current densities; though still in excess of 10(6) A cm(-2) at 77 K. Electron microscopy revealed that the outgrowths mainly consist of a large copper-oxide grain connected to Y2O3 grains. Y2O3 nano-scale inclusions are present irrespective of the deposition atmosphere, however at remarkably low densities compared to other literature data. We find that the twin plane density is lower and the twin structure more homogeneous in the case of films deposited in a mixture of O-2/Ar. This we ascribe to the absence of surface outgrowths which seem to block regular twin structure formation. Possibly the differences in necessary post deposition oxygenation time and in the electrical properties should be found in the difference in twin structure.