This thesis examines low-income housing policies adopted by Developing Countries in the last forty years and compares them with the economic development models implemented in these countries. The study argues that the changes in the housing policies adopted are a part of the general debate about the dualistic nature of underdeveloped economies. An attempt is made to place the issue of housing within the formal/informal and petty commodity sector polemic. The potential and limitations of Self-Help Principal of Housing as a concept and its practicalities are discussed. The centrepiece of the concept, that the users (in this case, the urban poor) are the best judges of dwelling requirements and that they strike a balance between their resources and their housing priorities, is seen as portraying only a partial view of the argument. Low-income earners are not only consumers but also producers of housing and most of the problems they face while housing themselves in the city are related with the production process of housing. Within this general context, attention is focused on the production process of low-income housing, and its relationship with the construction sector, the real estate market and the construction labour market. This study investigates the low-income housing production process in Lahore, Pakistan. A historical-structural approach is used to review the state of the local economy, the role of the urban poor and the low-income housing policies of the state. It is seen that the homelessness of the poor has become a major political issue and that Pakistani politicians try to gain popular support by offering token concessions to squatter households. The investigation into the house and land exchange process, type of building materials, and kind of construction labour used by the low-income households shows that the low-income housing production process, found to be existing in Lahore, is highly dependent on the formal sector of economy. The prospects of resolving the issue of housing the poor in Developing Nations, like Pakistan, by pursuing the housing policies based on the Self-HelpConcept, are limited. The ability of the urban poor to build their own dwellings rests on the access which they have to income-earning opportunities. Policies, therefore, should be framed to increase their employment opportunities in various sectors of the economy