Like the title says, I keep getting banding in the sky background. I’ve tried cranking up the dither but it’s still there, another solution would be to add the sky in post-pro but my objects have a nasty outline where they meet the alpha. A solution to either would be great 
If you are talking about Blender Internal and you are using the Blend Sky feature with Horizon and Zenith try this. Copy the Horizon color to the Zenith color so they are the same. Then offset the Value of the Zenith color (change the color picker to HSV) so it is about 20% larger or smaller compared to the Horizon color. There are some values that produce more banding than others. But by keeping the HUE and Saturation similar you may find a ‘sweet-spot’ where banding is less noticeable.
No, it was banding in both the sky texture and in a gradient BG in Cycles. A little blur tool and very slight HSV noise in Gimp took care of it.
Try also using floating point 32 bit rather than 8 or 16 bit images.