Selective and/or neutral processes may govern variation in DNA content and, ultimately, genome size. The observation in several organisms of a negative correlation between recombination rate and intron size could be compatible with a neutral model in which recombination is mutagenic for length changes. We used whole-genome data on small insertions and deletions within transposable elements from chicken and zebra finch, to demonstrate clear links between recombination rate and a number of attributes of reduced DNA content. Recombination rate was negatively correlated with the length of introns, transposable elements and intergenic spacer, and the rate of short insertions. Importantly, it was positively correlated with gene density, the rate of short deletions, the deletion bias, and the net change in sequence length. All these observations point at a pattern of more condensed genome structure in regions of high recombination. Based on the observed rates of small insertions and deletions and assuming that these rates are representative for the whole genome, we estimate that the genome of the most recent common ancestor of birds and lizards have lost nearly 20% of its DNA content up till present. Expansion of transposable elements can counteract the effect of deletions in an equilibrium mutation model, however, since the activity of transposable elements has been low in the avian lineage, the deletion bias is likely to have had a significant effect on genome size evolution in dinosaurs and birds, contributing to the maintenance of a small genome. We also demonstrate that most of the observed correlations between recombination rate and genome contraction parameters are seen in the human genome, including for segregating indel polymorphisms. Our data are compatible with a neutral model in which recombination drive vertebrate genome size evolution and give no direct support for a role of natural selection in this process.