AbstractThis paper presents a critical analysis of two sites and services projects in Dacca, in the light of previous studies of low income housing. The analysis demonstrates that resource limitation is not the most important factor preventing resolution of the low‐income housing problem, that there is a perverse use of resources which makes the situation worse, and that this use continues because it is in the pecuniary interest of the dominant interest group. The conclusions drawn are far from optimistic: (a) without radical changes in the main direction of resource allocation, there exists little or no possibility for an improvement in the living conditions of poor families; and, (b) the provision of housing for the lowest income group is more a question of political will and social engineering than building technolog