The problem of housing supply is one of the main public issues which is always being discussed by various organisations such as by consumer associations, planners and academicians. Their views have implied that the current supply of housing is unable to meet the demand of the society, especially those from middle and lower income groups. In the context of the Federal Territory of Kuala Lumpur, housing needs go beyond the need of shelter. It is a need for a decent home that one owns and which is located in a congenial environment. The main objective of the Fifth Malaysia Plan (FMP) 1986-1990, is to ensure that Malaysians, particularly the low income group have access to adequate shelter and related facilities. Besides that, some of the measures undertaken during the Fourth Plan (1981-1985) period will continue to be adopted. The Fifth Malaysia Plan emphasises the implementation and provision of housing as an important component of the various programmes aimed at eradicating poverty. Nevertheless, legal housing in the Federal Territory of Kuala Lumpur is still beyond the means and reach of the majority of the population, especially the lower income group. This dissertation also emphasies the housing situation and housing needs in Pennisula Malaysia. Besides that, it also considers the sources of housing finance available within the State and also tries to outline and define the housing problems faced within the State both from the view of house purchasers and the private developer especially in low cost housing provision. This also includes the housing types. In order to overcome the housing problems in Kuala Lumpur, this dissertation takes into consideration the different types of low cost dwelling that should be constructed in order to meet the different demands from the different household units of the low income group. A strategy has also been introduced by the goverment in order to lower the population density of Kuala Lumpur and indirectly to ensure a better living conditions also to prevent the over-use of dwelling units. Overall, the main theme of this study is to find out how effective the implementation of low cost houses in meeting the needs of the lower income group in federal Territory. The ultimate purpose of housing programmes should be the provision of better accommodation for the people, to provide a better housing for the squatters and also to prevent new squatter settlements coming up. In the final chapter, in trying to redefine the major housing problems and also in overcoming these major problems there been put forward a few suggestions and proposals.