In the new Millennium, sustainable urbandevelopment is becoming a fashionable topic,almost as popular as globalization or citycompetition. European countries differ widelyfrom each other on whether they have a nationalpolicy for urban development or not, and if so,on the emphasis of such a policy. Pan Europeanorganizations are reluctant to establish aclear vision of a desirable European pathtoward urban development. This is even true forthe European Union: although the EU is runningextensive systems of support policies, it hasno clear expectation of how European citiesshould develop or what they should look like inthe future. (The European Spatial DevelopmentPerspective, ESDP, contains some statementsabout desirable urban development, but this isfar from being a binding document or havingsubstantial influence on the allocation ofmeans of support.) The criticism leveled at the EU for having nocommon policy for the future of its citiesshould be seen in perspective, as the lack ofideas/patterns for sustainable urbandevelopment is even more visible in theaccession countries and in Eastern Europe. Thedramatic changes in the cities of thepost-socialist countries even appear to bemoving in the opposite direction – away fromsustainability. Sustainability is a complex phenomenon, havingeconomic, environmental and social aspects. Anyconcept of sustainable urban development mustincorporate sectoral concepts; these must bewell integrated in the overarching urban,regional and governance policies. One sectoral policy of great importance tosustainable development is housing. Withoutsuitable suggestions for housing policies, noconcept of sustainable development can besuccessful (and vice versa). Yet, housing isone of the less frequently discussed aspects ofsustainability. This might be explained by theway housing research has developed; economicand social aspects have taken precedence overenvironmental effects and externalities. Ofcourse, the fact that housing is not part ofthe common policies of the EU also helpsexplain the present situation. This paper elaborates on the link betweenhousing and urban development. Using examplesof good and not so good practices, we considerwhy housing experts should investigate theenvironmental and spatial externalities ofhousing policies and why experts working onurban development policies should take theresults of such analyses into account. Suchcollaboration could raise the status ofsustainable urban policies supported bysuitable housing policies.The analysis presented here pertains to theWestern and Central parts of Europe, roughly tothe area of the soon-to-be-enlarged EuropeanUnion.The structure of the paper is as follows. Thefirst chapter discusses models and trends ofurban development. The second chapter gives anoverview of policies with the potential toinfluence urban development, followed by goodand not so good examples for such policiestaken from both Western and Eastern Europe. Thethird and fourth chapters concentrate on largehousing estates, where interventions wereneeded to ensure the sustainability ofdevelopment. Finally, chapter five offers someconcluding remarks.