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When you have a psyker locked in assault, can they use the power 'smite' in the psychic phase on the unit they are engaged in assault with?

Yes. There's no such thing as a counts-as-shooting power anymore.

Also note that in general 8th cares a lot less than 7th about whether units are engaged in combat -- it doesn't even have a word for it and just uses language like "within 1" of friendly/enemy models" when it needs to talk about it.

 labmouse42 wrote:
When you have a psyker locked in assault, can they use the power 'smite' in the assault phase on the unit they are engaged in assault with?

No.
If you meant during the psychic phase while within 1" of an enemy unit, I think so. There's no restriction on Smite that prevents it.

Oh, right, definitely not during the "assault" phase (which is now split into the charge and fight phases).

Sorry for the poor wording.

In particular I was asking if you could use it while enemy models were within 1" of you.

I brought 10 psykers in a list and my opponent was thinking it was not rules-legal for me to be using smite in the psychic phase doing ~20 mortal wounds per round while also beating his face in.

I can understand your opponent, that sounds severe to take all that in the face unexpectedly. I'll definitely find a place for my Sisters of Silence in my lists