A field effect transistor (FET) is formed on a silicon substrate, with a nitride gate insulator layer being deposited on the substrate and an oxide gate insulator layer being deposited on the nitride layer to insulate a gate electrode from source and drain regions in the substrate. The gate material is then removed to establish a gate void, and spacers are deposited on the sides of the void such that only a portion of the oxide layer is covered by the spacers. Then, the unshielded portion of the oxide layer is removed, thus establishing a step between the oxide and nitride layers that overlays the source and drain extensions under the gate void to reduce subsequent capacitive coupling and charge carrier tunneling between the gate and the extensions. The spacers are removed and the gate void is refilled with gate electrode material.